The Ledger – Your Most Important Tool

It's one of our least favorite things to do. The idea of accounting for our spending is at best tedious and at worst nightmarish, but it's the only way to make sure that we're keeping track of our available funds and not exceeding our means. Your main tool in keeping your checkbook in line and under prudent scrutiny is the ledger. You get one with each box of checks that you order. It's where you identify a beginning account balance and keep a running tab on your spending by annotating the number and amount of each check written on the account. The ledger is also used for recording ATM withdrawals, interest earned, banking fees and any other account activity taking place that affects your balance. Here are a few tips for maintaining a current ledger that, once started, should easily become second nature to you each month.

• Keep all of your receipts. The main reason you balance your checkbook is to reconcile all the money you've spent that week or month. Receipts, especially those for ATM withdrawals, will remind you to record the activity in your ledger so that nothing is omitted.
• Record all transactions on that account in your ledger book each day. Again, this can be tedious, but it works well. Some people write in their ledger as soon as they write a check at the store register. It's very easy to forget about ever doing it if you don't do it straight away. People that don't use duplicate checks are the most vulnerable – unless, of course, they have a photographic memory.
• Don't automatically believe the bank's balance. We're easily fooled into thinking that the bank must be right, and is always current. Nothing could be further from the truth. The bank can sometimes be a day or more behind your ledger. So, if they say that you have $200 in your account but your ledger says $95, go with the ledger because the bank has no way of knowing what checks you may have written until they arrive for payment – which could take day or even weeks. This is a major reason that people overspend; they don't record the checks they've written.
• Check your bank statement against your ledger at the end of each month. This is where you'll find the amount of interest earned, banking fees and ATM surcharges that have been levied. If the discrepancy is small, it's typically these items that keep your checkbook balance from matching the bank's amount at the end of the month. When a check clears, place a mark next to it in your ledger so that you know it's been paid.
• Record all automatic debits and direct deposits in your ledger. It's very easy to forget things when you don't see or think about them all the time. Your employer should give you a check stub when you direct deposit so that you can keep track of how much money you're being paid. Bills that are debited automatically during the month should be recorded on the day they're paid so they aren't overlooked.