In the age of smartphones, balancing a checkbook can sound like an archaic activity, something people did back in the “olden days.” Thanks to online banking and their associated apps, accessing a person’s financial activity has never felt easier. Despite popular belief, however, keeping a record outside of the online register is your best bet for achieving true financial responsibility.
By simply following the steps below, you will be well on your way to achieving those once hard-to-reach financial goals.
- What Is a Checkbook Register?
- Why You Should Balance Your Checkbook
- How To Balance Your Checkbook
- Common Mistakes and Tips for Balancing a Checkbook
- Using Technology for Better Budgeting
- Keeping Your Checkbook and Money Balanced
Back before you could just access your transaction history on your phone, or pay your bills with automatic payments, the checkbook register was an easy way to check your transaction history and remaining balance. The checkbook register would be nestled in the back of the checkbook, and in a time where people were used to writing checks frequently — both to shop and pay bills — it was easy to just write the total down in the checkbook register and add it up. From deposits to withdrawals, the deductions and additions made throughout the life of the account were recorded in real-time.
Learn: How To Read a Check
Why the Checkbook Has Staying Power
No matter how old school the practice feels, the bottom line is that balancing a checkbook or keeping a physical ledger is essential for proper money management. According to a survey conducted by GOBankingRates, 49% of Americans live paycheck to paycheck. Actively tracking what is spent versus what is earned can do wonders for staying on a budget and managing money efficiently.
In the era of instant gratification, balancing a checkbook is anything but that. The good news, however, is that balancing your checkbook is uncomplicated, and the rewards of taking the time to do it can be reaped quickly. By simply following these steps below, tackling your checkbook register will come easier than an Instagram post.
- If It Isn’t Logged, It Didn’t Happen. The first key to success in balancing a checkbook is simply writing down the transactions. Buy groceries on the debit card? Log the amount in the register and deduct it from the current total. Today was payday? Add what was deposited into the account to the balance. Spend/deposit, log and repeat. Make sure to account for miscellaneous charges such as ATM withdrawal fees or a monthly subscription service you may have forgotten about.
- Check the Bank’s Work. Before online banking, as mentioned previously, consumers had to wait for a banking statement at the end of each month to compare against the check register. With online banking, the wait has been eliminated. One no longer must wait on snail mail with around-the-clock access to the accounts. The balance in the register can be instantly checked against what the app is reporting.
- Understanding the Outstanding. As much as online banking has given in the form of time, the reality is there is still a lag between when money enters or exits an account. This all depends on the type of transaction that has or will occur in the future. Paying by check, for example, can take several business days to reflect on the running balance, depending on how and when the payee processes the check.
- It All Hangs in the Balance. If the t’s are crossed and the i’s are dotted, the balance online should match the physical record. If they don’t match, it’s time to figure out why. Perhaps the math is off, or two digits were transposed. The bank could be the one in the wrong. Either way, figuring out the discrepancy is essential to the money being managed properly by both parties.
- Write the Wrong and Reconcile. Most financial institutions have a window for when discrepancies can be brought to their attention. Mistakes are costly — and without a watchful eye, bank fees can creep in without warning. Keeping a running log is not to make anyone’s life harder, but rather to ensure the money earned is going to its rightful owner. In the digital age, fraud is prevalent. Balancing your checkbook, and having an easily accessible list of charges you’ve made, can aid in finding fraud charges before they do any damage.
- X Marks the Last Spot. Once everything adds and subtracts appropriately and the balances match, it is important to make note of the last time it was balanced. It is recommended to draw double lines underneath the balanced amount in the checkbook. This will act as a reminder for the last known correct amount in the register — staying on track until the next transaction is made.
Find Out: How To Cash a Check
Mistakes happen, but they don’t have to be costly. Banking is a people business. It takes several individuals to make a transaction come to fruition. Somewhere down the line, a costly mistake could be made. A GOBankingRates survey found that average Americans pay $7 in banking fees every month. While it may not seem like that much initially, over time the amount can add up.
Not only can fees be incurred by the account holder, but merchants can create them, too. Human error and processing fees can occur, which can be charged to the purchaser’s account. One slight surprise in bookkeeping could cause a ripple effect if sufficient funds are not available beyond the price of the original transaction.
Staying on Track With Transactions
Avoiding overdraft fees, bounced checks, fraudulent billing and human error can all be done by maintaining an updated checkbook balance. While it won’t come as second nature at first, there are several ways to maintain the balancing act.
Keeping a checkbook register, enrolling in internet banking and reconciling checks are all great ways to stay on top of what is coming in and out of the account. The checkbook register doesn’t have to be a handwritten one; several budgeting apps can be used to record deposits, withdrawals and other financial transactions.
Even though it seems that balancing a checkbook is an out-of-date practice, the reality is technology makes the practice more modern. There are even many smartphone apps on the market that can be utilized to keep checking account balances in check. GOBankingRates found a few on the market that include:
- YNAB: You Need A Budget–This is a great app for those new to the world of saving and budgeting. Not only can you balance your checkbook, but it also offers a variety of educational materials for managing money.
- Mint–Tired of going over budget? Mint is a great way to track all expenses in real-time. The app connects all accounts in one convenient spot.
- Digit–This app makes saving money easy because it’s done for you. Digit moves money to the savings account each day and won’t transfer more than the user can afford.
- IOU–This app is great for people who lend or borrow money often. IOU will send reminders when money is owed and to whom.
- BUDGT–Member of the gig economy? This app is great for those with a sporadic income. A monthly budget can be set up with recurring and one-time incomes/expenses with an overview of where each penny is spent.
Knowing where and when those hard-earned dollars are received and spent is the crux of budgeting responsibly. Utilizing a checkbook register to actively track every transaction, and then balancing it at the end of each month, is an excellent way to double-check that you’re not spending outside your means in any one category and ensure those financial goals can be achieved.
Click through to read more about how to create a budget you can live with.
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Arielle Moscati contributed to the reporting for this article.
This article has been updated with additional reporting since its original publication.