Welcome to Financial Literacy 2 - Taking Control of Your Money
Today we're going to learn how to balance your checkbook. Did you ever have a bank account? Did you feel lost when you got that monthly statement? Well, you have options. You can wait, you can hope it will take care of itself or, most popular, you could just throw it away. However, every action has a consequence. Either way, you throw money down the drain. You can take your money and run. You can balance your own checkbook.
To balance your checkbook, you must use your check register. Without recording your checks, ATM transactions, debits, deposits, and other withdrawals or transactions, you are at the mercy of the bank.
There are four reasons to balance your checkbook every month. Number one; your bank records and your daily records should match. Number two; you typically only have 60 days in which to inform the bank of an error. Number three; if you make a mistake or forget to post an ATM withdrawal, debit card purchase, or other transaction in your checkbook register, you may start bouncing checks and incurring fees which are often 25 dollars or more for every returned check. Sometimes people make such a mess of their checkbook by not balancing regularly that they have to close out their account and open another one.
You can balance your checkbook monthly. It's easy to do. What you'll need is your most recent bank account and/or cancelled check, a checkbook balancing form, your checkbook register, a calculator and a pencil. Here's how to start.
Number one; get a copy of your monthly bank statement. These should be mailed to you each month. If you misplace one, you can ask for another usually for a small fee or get a copy on-line usually for free.
Step two; compare your statement to your checkbook register. Throughout the month, you should have been recording every deposit and every purchase or withdrawal. If you see charges or deposits on your statement that aren't in your register, add them now.
Step three; record any fees or balance adjustments that may appear in your statement.
Step four; subtract from your register's balance any checks that have been written but have not yet cleared the banking system.
Finally, you're at the finish. Check and see if the total matches your statement. If it does, your account is balanced. If not, go back through your register and see if you've missed anything or if you've made a mistake with your math.
Remember to watch for simple errors. Some of the most common are math errors. Look for reversed numbers, such as 35 instead of 53 dollars. Watch for check and deposit errors. Subtracting a deposit instead of adding it, or adding a check instead of subtracting it. And then watch for automatic payments that you may have forgotten to record. To get on the road to financial freedom, you need a place to start. Start at your own checkbook.