Balance the checkbook

Your checkbook should look something like this:

The X column is where you put an X or a check mark to indicate that you've "reconciled" that line item.

When your bank statement arrives, reconcile your checkbook immediately. There are instructions on the back of the bank statement, as well as a form to fill out. If you're not comfortable reconciling your checkbook (sometimes called balancing), you can ask your banker for assistance.

The first step is to go through the statement and put an X or a check mark in the "X" column in your checkbook for every check and deposit recorded on the statement.

If there are withdrawals or deposits not recorded in your checkbook, write them in now. Sometimes this happens becuase you don't record an ATM withdrawal or a Debit Card transaction.

The bank statement will list your beginning balance, ending balance, credits, debits, interest earned, fees charged, and any other adjustments to your account.

The form will look something like this:

1. From your checkbook, record your final balance here
2. From the statement, record the total of any interest earned here
3. From the statement, record the total of any service charges here
4. Compute this number using this formula: Balance (1) + Interest (2) - Charges (3), and record it here
5. From your statement, record the Statement Balance here
6. Add up all outstanding checks and record the total here - the table below can be used to record the checks to help in adding them up.
7. Add up all outstanding depsosits and record the total here - the deposit table below can be used to help in adding them up.
8. Compute this number using this formula: Statement Balance (5) - Outstanding Checks (6) + Outstanding Deposits (7)

Forms for totaling outstanding transactions

Reconciling a checkbook that does not balance.

Subtract the Reconcile balance (8) from the New Balance (4).

If the difference is just a small amount - you decide how much - then don't waste your time looking for it, just update your checkbook as below. (I won't look for anything less than 5 dollars).

Go through your checkbook looking for the difference. You are looking for a number, in either the deposit or withdrawal column that is either equal to this number or equal to 1/2 of this number (you may have added it instead of subtracted, which would double the error).

Look at all items since you last balanced your checkbook against a bank statement. Whether they were on this statement or not.

If you find the item, figure out where you made your mistake, correct it, and adjust your balance accordingly.

If you don't find it, then start looking for amounts close to the difference or 1/2 the difference, you may have made a calculation error.

If you still don't find it, then recalculate your balances for the entire period since you last balanced your checkbook. Start at the first entry since you balanced, and add or subtract each entry, compare it to the written balance. Do this until you find the error.

You can chose to either update all the balances after the error, or just put in an adjustment to bring the final balance to match the computed New Balance (4) above.

Updating your checkbook

Record any interest and charges in your checkbook. Write a line "Reconciled" and the reconciled balance in your checkbook.

More finance tips

• Permanent files What to store in your permanent file.
• Safe Deposit Box What to store in, and how to get, a safe deposit box.
• Filing Checklist How to develop a filing system, either to start a new one or improve your existing one.
• Other Files What to else to keep in files.
• Budget Keeping a budget.
• Medical Records What to keep, and what to do with medical records.
• Home Inventory Creating and maintaining a home inventory file.
• Car Purchases The most efficient use of your money when purchasing a car.
• Phone Book An organized personal phone book file system.
• Keeping Records Where to keep records.
• A home office Setting up a home office.
• Home Office Running a business from home.
• Banking Banking, savings, checking, and other bank accounts.
• Balance the checkbook How to balance a checkbook.
• Interest What interest can do for you or to you.
• Bad checks How much a bounced check really costs.
• Tax refund What to do about tax refunds, how to calculate what to have taken out for taxes during the year.
• Pay off debt How to get out of and stay out of debt.
• Cutting Expenses Ideas for reducing expenses as much as possible.
• Investing Making wise investments.
• Credit Cards Making wise use of credit cards.
• Debit Cards How to use debit cards.
• Finances and records Getting started with your finances and records.

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