Balancing Act: Keeping Your Checkbook in the Black

Part 3, Reconciling your Bank Statement

In Part 2 of Balancing Act: Keeping Your Checkbook in the Black, we examined the practical steps involved in keeping your checking account current; the “how-to’s” of balancing your checkbook register. We have attempted to stress the importance (not to mention the financial advantages) of maintaining your account in good standing.

The final article of this series will expound on how to ensure that you and the bank are seeing “eye-to-eye”. It is very important that you periodically check your numbers against your bank’s numbers. Most banks will mail you a monthly statement showing all of your accounts’ transactions during that period of time. To verify that you and the bank agree on the amount of money that you have, you must reconcile your records to theirs.

It must be pointed out, to begin with, that it is much easier to reconcile records if you have records to reconcile. In other words, you’ll find this process to be much simpler if you are keeping a balanced and up-to-date checkbook register. It’s difficult to know whether the bank’s totals are right or wrong if you have only a vague idea of how much money is in your account. You’ll just have to take their word for it. So, if it isn’t already, make your checkbook register current first.

When you receive your monthly statement, look it over carefully. Every transaction listed should also be transcribed in your checkbook register. It may help to make a small mark by each corresponding transaction in your register and on the statement to keep track that they have been accounted for. When completed, all transactions on your bank statement should have a mark by them, indicating that you also have those transactions annotated in your register. If there are any transactions that you do not have in the register, you’ll need to include them in your register at this time, and adjust your balance accordingly. Verify what the transaction is; if you are not sure, or if you disagree that it should even be on your account, you’ll need to contact your bank for clarification or correction.

Once you’ve accounted for every transaction on the bank statement, you now have to account for every transaction in your register. There are likely to be transactions that you made toward the end of the month (debit card purchases or checks that you may have mailed out, for example) that did not post (subtract from or add to your account by the bank) before the end of the statement cycle, which is normally the last day of the month. If you have any of these transactions which are not included in the statement, you’ll need to include them at this time. Most bank statements provide an area for you to do this on the back of the form itself.

Find your ending balance for the month on your statement; turn the statement over and write this amount on the top line of the reconciliation area. (You can also do this on a blank sheet of paper if there isn’t a place for it on the back of the statement.) List every transaction that is outstanding (not included in the statement) from your register. Subtract or add them accordingly to the ending balance. This adjusted balance should now match the balance of your checkbook register.

If the two balances do not match exactly, check the amounts entered for each transaction. Occasionally, a number may be transposed or incorrectly entered, by you or by the bank (they’re not perfect, either). Make sure that each transaction is accounted for in both the statement and your checkbook register. This, too, can be easily overlooked.

If you are meticulous in the keeping of a balanced register, you’ll find that the reconciliation is quite easy and effortless. All that you need do to is add and subtract. Knowing the amount of money that you have available is the responsible way to handle your checking account, and it will pay immediate dividends in money saved. Why give it to the bank in the form of extra fees? You worked hard for it; protect it. Just a little discipline and effort can go a very long way.

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