How to Balance Your Checkbook

how to balance your checkbookhow to balance your checkbookWriting checks has gone out of style. Yet one thing you still need to do is balance your checkbook.
Balancing your checkbook means that you have recorded all your transactions. Plus that what you say you have and what the bank says are the same thing.
This is also known as reconciling your account.
This is not anywhere near as hard as it might seem. 
I will walk you through the different tools that you can use to balance your checkbook.
Plus how to balance your checkbook by hand. This is a great way to understand what a reconciliation is .

Tools for Balancing a Checkbook

Today there are many options available for managing your checking account.  We are no longer regulated to a pen and paper. 
Following are the options you can consider for tracking your checking account.
    1. Pen and Paper – maybe you like doing it the good old fashioned way.  There is nothing wrong with this.  And it has some major emotional benefits when you write out your expenses. (Really doing any type of writing is beneficial.)
    2. Downloadable Software – this is software that you buy and use on your own desktop.  This gives you the benefit of maintaining control over the data so you can use it down the road. Even if the company goes out of business.  I prefer Quicken for this.
    3. Online software – sites such as Mint will let you link your accounts to their software. They you log on and manage your finances from there. Ones that I have checked out and like: Mint and Personal Capital.
  1. Phone apps – I personally have not used one of these but know that there are many of them available.  I recommend you pick out two or three and use them simultaneously. This allows you to quickly determine which one you like the best. 

A couple of things to keep in mind when you select your checking account tracking method.

  • You don’t want to have to duplicate too much work. Don’t use a desktop software and a tracking app on your phone unless they sync together.  The easier you make it the better, because you will stick with it for the long run.
  • Select what works for you.  If you rarely find yourself sitting at a computer then a phone app might be the best option for you.  Select the tool that matches your personality and lifestyle.
  • Select a method that you can continue to use as your financial life changes.  You might not be investing right now, but hopefully you will be soon. Ensuring that you can manage all aspects of your money is a good feature to look for.  The last thing you want to do is commit time and effort to setting up a program. Then having to change it because your life changes.

How to Balance Your Checkbook with Pen and Paper

Step 1: Enter Your Transactions

Use the register that came with your checks.
Enter in the information for each transaction that occurs. These will include things like: writing checks, deposits, ATM withdrawals, and debit card purchases.
Include the date, a check number, description of transaction, and the amount.
After you have entered the transaction in the register then you can calculate your new balance. Do this by adding or subtracting your payment/deposit from the last balance.

Example:  Starting Balance $100

Number Date Description Payment Deposit Cleared Balance
271 1/10/13 Target 10.00 90.00
Debit 1/11/13 McDonalds 3.00 87.00

Step 2:  Balance to your statement

Upon getting your bank statement you will compare what is on the statement with what is in your register.
Go through your register and place a check-mark in the cleared column if the transaction is on the statement. At the same time mark it off on the statement to ensure you have cleared it on your register.
This way if you get distracted you won’t wonder where you are!
After you have cleared all the transactions, use a calculator to confirm the balance. Add or subtract those items in your register that are not cleared. If it was a withdrawal, you will add it. If it was a deposit you will subtract it.
When you have done this for all the items not on the statement, the total should match the ending balance of your bank statement.


Number Date Description Payment Deposit Cleared Balance
271 1/10/13 Target 10.00 90.00
Debit 1/11/13 McDonalds 3.00 87.00
272 1/12/13 Water Bill 50.00 37.00
Debit 1/13/13 Starbucks 4.95 32.05
Deposit 1/14/13 Paycheck 150.00 182.05

Statement Balance: $232.05

Your Balance: $182.05

Non Cleared Payments: $50.00

Non Cleared Deposits: $0.00

Added Back to Balance for New Total: $232.05

With this example your checkbook is balanced.  At this point you are done until the next statement!

If your checkbook is not balanced, then you need to find out why. There are typically three reasons there is a variance.
    • Math error – to find this you need to review your register for mistakes. Use your calculator and redo the addition and subtraction from the last time you balanced your checkbook.
    • You did not enter a transaction on your register. If this is the case, you will catch it when you check off the items on your statement.
  • You entered a transaction twice. Review the un-cleared transactions and see if you recorded one twice.

The fourth option would be that the bank messed up. If after checking the above items you still can’t find the error call your bank to ask for help.

How to Balance Your Checkbook with Quicken

Software has made it so you don’t have to do it by paper anymore!  When you are balancing your checkbook with

Ways to Make Sure Your Checkbook Balances:

  • Keep all receipts in one place if they need to be entered and another if you already entered them.  I have a place on my desk that all un-entered receipts go.  Once they have been entered I have a file for current month receipts that have been processed.  The simple act of having a process makes it easy to not miss expenses.
  • Use a calculator – this eliminates many problems.  This is not a school math test – use a calculator!
  • Double check your work – if you entered lots of transactions it may be beneficial to recheck the math to be safe.  I know when I used to balance by hand this was often when I would make a mistake, after a session of lots of bill paying!  So if you are doing this by hand, take an extra couple minutes and check your work.
  • Do it at a minimum monthly – don’t get too far behind, this is when it becomes a headache that seems to take forever to solve.  By balancing more frequently you very quickly catch problems.

There you have it, the easy to manage process of balancing your checkbook.  See, that was not so bad!