How to Balance Your Bank Account Each Month
The thought of balancing your checking account each month can be daunting, and is easily put off or ignored.. Millions have probably never thought of trying to balance, or reconcile, their bank account with their check book. Well, that is not surprising, as the majority of people do not like maths or figures, and when that bank statement arrives, they just accept what is there and that is it. That is not good for home budgeting.
Why should you check your bank statement, and compare it with your check book? The basic reason is time. Checks take time to clear, from a few days for local checks to weeks for international checks. That balance you see on your statement may be way out. You could be jumping around in delight that you have $1000 left in the account, when in a few days' time a check for $1500 will clear and wipe that out and beyond. So, you cannot really know your true home budget situation until you have balanced your checking account.
Checking your bank accounts every month is really one of the basics of looking after your home finances, and thus your family. You will feel much more in control if you know exactly where your home budget stands. Luckily, there is no need to be daunted by going through your check book and bank statementsonce a month, and here are a few tips to help you on your way:
1. Keep track of all of your expenses and income.
This can be tricky with electronic checks, direct deposits and bill pay tools. Using your checkbook register, a simple spreadsheet program, or a simple home accounting software package, you can easily record every transaction. It does not matter where you keep your records, really. Just be sure to keep them.
2. Use the worksheet your bank provides to balance your account every month.
This worksheet is so straightforward anyone can use it, and you can accomplish this task while watching your favorite television program at night. The worksheet usually begins by asking your for your ending balance from your bank statement. You then add your deposits and subtract your expenses that are not on your statement and you should come up with a match with the balance you have in your checkbook register or on your spreadsheet.
By tracking your expenses and deposits as suggested in tip #1, all of your information is at your fingertips and finding any discrepancies is quick and easy. Better yet, discrepancies are less common and it will literally take you less than ten minutes to balance, if you do it monthly. The longer you wait to balance your account, the more information you’ll have to go through and the more likely it is you’ll have errors.
3. If you do find any errors, take a look at your math first.
It is easy to accidentally hit the wrong number on your calculator or to forget to carry your 1. Other common math errors include basic addition and subtraction, reversing numbers, subtracting a deposit, automatic payments not deducted, ATM/debit card transactions not deducted, and fees or dividends not accounted for.
None of the above requires an accountant. If the truth be told, many accountants are not good with their home budgeting. I was a professional management accountant back in the 1980's and I did not practie what I preach often eniugh. But I know you can do far better than that.