How to balance a checkbook in 5 simple steps

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In a Nutshell

Not everyone knows how to balance a checkbook. If you learn, you can always know your actual account balance, helping you reduce your chances of getting hit with overdraft charges. You’ll also be able to keep an eye out for fraud and errors, and better manage cash flow and debts.
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Back in our parents’ and grandparents’ days, checks were the primary non-cash way to spend money — so knowing how to balance a checkbook was key.

Now there’s a whole world of payment options: ACH transfers, ATM withdrawals, PayPal, mobile wallets, and credit and debit cards. Since the trend has moved away from checks, the idea of using your checkbook register to keep track of your account might seem pointless.

But the original reason for balancing checkbooks still stands: You need to know what your actual, up-to-the-moment balance is, as opposed to what the bank shows as your account balance at any given time.

Thankfully, we have more modern methods to accomplish this today.



What does it mean to balance a checkbook?

To “balance a checkbook” — in its literal and maybe old-fashioned sense —  means going through your bank statement and checking each transaction against what you’ve recorded in your check register. The idea is to make sure everything is accurate, that your balance is correct, and that your records and the bank’s are in sync.

But most people use checks very little these days, if at all — so tools like Microsoft Excel spreadsheets or Google Sheets, or spending trackers like YNAB or Mint, might make a lot more sense than using your check register to balance your checkbook and keep track of your account. Along with allowing you to easily record lots of different types of transactions, these digital tools also can help you budget and do the math for you — things a checkbook register can’t do.

While we might still use the phrase “balancing your checkbook,” you can take it more generally to mean tracking all of your account activity and making sure your records match your bank’s — whether you use a checkbook register or other tools.

Why should I balance my checkbook?

Balancing your checkbook can protect you in a lot of ways.

  1. See your actual balance — Your current checking account balance as the bank shows it may not be an accurate reflection of how much you can spend. It can take a while for charges to post. But if you track your spending, you’ll know your actual balance as opposed to what the bank says is available, helping you avoid overdraft fees and other surprise charges.
  2. Identify fraud early on — You can spot fraud faster if you’re keeping close tabs on your bank records. That’s especially important since how early you report the fraud can affect your liability for unauthorized charges.
  3. Catch errors — Sometimes merchants may charge you the wrong amount, or your bank makes a mistake. Balancing your checkbook could help surface the error because you’re likely to discover a discrepancy somewhere while reviewing all of your transactions. 

If I use online banking, do I still need to balance my checkbook?

Even if your transactions are mostly digital, balancing your checkbook is a good idea because it can help you avoid overdrafting your account, paying erroneous charges or even becoming a victim of fraud.

With online and mobile banking apps, you may be able to get real-time access to your accounts and get notifications when your bank account is at risk. But even with access to digital tools, balancing your checkbook monthly will help you ensure that your spending records align with your bank’s.

How to balance a checkbook

The rise of digital tools has helped make checkbook balancing a lot easier than the old pen-and-checkbook-register process. Either way, here’s a step-by-step look at what’s involved.

1. Record your transactions

Any time you write a check, make a payment using your debit card, or initiate any other kind of debit or withdrawal, always record the transactions in your spending tracker or checkbook ledger.

If you’re writing a check, note the following info in the checkbook ledger too:

  • Check number
  • Date
  • Transaction details (recipient or what the check is for)
  • Amount

With online banking and spending tracking tools, it may be easier to record all your transactions digitally. If your spending tracker has a smartphone app, you can enter the info there, just like with a pen-and-paper register.

Or you can keep receipts and then enter them all in when you get home, or at the end of the day. Remember to enter in every transaction that’ll go through your bank account, including ATM withdrawals, automatic payments and online purchases.

2. Calculate your actual balance

Each time you enter in a new transaction, make sure to update your balance. This will be your actual balance, which is a better picture of how much you have to spend because it includes payments that might not have hit your bank account yet.

For example, if you have $1,000 in your checking account and spend $50 on food, you’ll adjust your balance to $950 after you enter it in your register. Now you know that you have $950 left to spend from your account, rather than what shows as your current bank account balance of $1,000.

This is one area where digital tools have a big advantage over the pen-and-paper method. You’ll need to be pretty good at math on the fly or use a calculator if you prefer the checkbook register method. Digital tools can do math for you automatically. 

3. Reconcile your transactions

At least once a month, it’s important to sit down and reconcile your transactions. Traditionally, people did this after getting their bank statement in the mail. But with the internet, you can do this pretty much any time you want.

To reconcile your transactions, go through your bank statement line by line. You’re looking to match up the “cleared” charges that are on your bank statement (meaning charges that hit your account and have been paid) with charges that you’ve listed in your register.

If you’re using a paper checkbook register, there’ll be a little column with a checkbox in it to mark cleared charges. If you’re using a spending tracker, it’ll look a bit different depending on the program you use.

4. Compare the balance in your checkbook register vs. bank statement

When you’re done reconciling your transactions, add up the cleared charges on your checkbook register or spending tracker.

If you’ve successfully balanced your checkbook …

  • Your bank statement balance will exactly match the cleared charges from your checkbook register. That is, your cleared charges on your register and your bank statement will be the same.
  • There may be some additional charges on your checkbook register that aren’t listed on your bank statement. This is normal, and it means these charges haven’t cleared yet.

5. Troubleshoot any discrepancies

If your bank account balance doesn’t match up with the cleared charges on your checkbook register, don’t panic. It’s time to put your detective hat on and find the cause.

Here are a few things to look for.

  • Did you miss any charges or deposits?
  • Are there any fees that you didn’t account for?
  • Did you enter in the numbers and add them up correctly?
  • Did the merchants or the bank make any mistakes in charging you?
  • Did you receive any refunds from returned items or missing shipments?
  • Are there any charges you don’t recognize, which could be a sign of fraud?

If you’ve tried all these and the balances still aren’t matching up, try taking a break for a while. You’ll be surprised how easy it is to spot errors when you’re looking with fresh eyes. Go through everything line by line again, adding the balances up as you go.

If that still doesn’t work, try having a trusted friend or family member look over your numbers for you. Many nonprofits and community organizations also offer free financial coaching and mentoring, which can be another handy option as well.

If all else fails, you can also ask for checkbook balancing help from a bank teller at your local branch. While some banks offer free assistance, others may charge a fee, so be sure to check with your bank to see if you need to pay.


Next steps: Tips for remembering to balance your checkbook

Creating any new financial habit — especially balancing your checkbook — can be challenging. It’s a good idea to set aside a certain time at least once a month as you get started.

Set a reminder on your phone or calendar for once a week. This will help cement your new habit, and it’ll be easier to balance your checkbook, too, since you won’t have as many transactions to go over. The more frequently you balance your checkbook, the more you’ll feel on top of your account.


About the author: Ben Luthi is a personal finance freelance writer and credit cards expert. He holds a bachelor’s degree in business management and finance from Brigham Young University. In addition to Cr… Read more.