Calculator: Keep Your Checkbook Up-to-Date

by Bonnie Sewell Miller

Sooner or later, anyone having a share draft/checking account learns that an essential part of managing a checkbook is balancing it. This is an easy task if kept up-to-date, but a nightmare if not. For some people, the nightmare compounds itself to the point that they either stop writing checks to allow the account to somehow

rectify itself, or they close the account and start over with a new one.

If you've never bounced a check or had a mistake in your checkbook, consider yourself fortunate. Most people who bounce checks believe they have more money in their accounts than they actually do because they've made errors in their checkbook registers. Common problems include addition and subtraction errors and forgotten items, such as ATM (automated teller machine) withdrawals or fees, debit card transactions, or automatic payments. Your credit union may offer the convenience of an overdraft protection program where your savings or money market account covers insufficient funds in your

share draft account.

Balanced checkbook benefits

Balancing your checking account is important for many reasons:

Managing your money,



Keeping tabs on your cash flow,



Determining which checks are outstanding,



Avoiding overdraft and nonsufficient funds fees,



Avoiding embarrassment of bounced checks,



Knowing how much money is in your account,



Protecting your credit,



Ensuring that your checkbook balance agrees with that of your financial institution, and



Verifying that your financial institution has made no mistakes.

How to balance your account

Your first goal should be to maintain accurate records. Write down everything you do with your account. Keep every deposit slip and ATM and debit card transaction receipt, and accurately record the dollar amount and the date of transactions in your checkbook register. You never know when

you may have to refer to one of these receipts.

Review your checkbook register at least once a week.

Your second goal should be to reconcile your checkbook as soon as possible after receiving your monthly statement. Once you've mastered the following steps, you should be able to balance your account each month within

30 minutes to 45 minutes.

1. Find a comfortable place where you can spread out your materials and work without interruptions.

2. Collect your current statement; last month's statement; ATM, debit card, and deposit receipts; your

checkbook and register; a tablet, pencil, and pen; and calculator.

3. Compare your statement with your check register to see whether all of the checks you've written have cleared your account. Place a check mark in your register beside each check that appears on the statement as having

cleared.

Enter the name of the payee and the amount of the check in your register before you write a check.

4. Organize ATM and debit transaction receipts in order by date and compare them with your register. Place a check mark in your register beside every ATM withdrawal and debit transaction that matches those listed on your

statement.

5. Repeat this procedure for every deposit.

6. On the back of your statement is a work sheet for calculating your checking account balance. If your credit union doesn't print this work sheet on the back of your statement, use a blank

sheet of paper.

At the top of the page, write the balance shown on the front of your current statement. Keep in mind at this point that your statement probably isn't as up-to-date as your checkbook register. It might not show more recent

deposits or withdrawals.

7. Add any deposits you've made that aren't listed on your statement. These are "outstanding deposits."

8. List the number and amount of any "outstanding checks"—those that have not cleared your account. Also

include recent ATM or debit transactions not shown on your statement.

9. Add these uncleared checks and transactions and subtract the total from the sum in step seven above. This

new balance should agree with the balance in your checkbook.

Sample work sheet

When balances don't match

If your checkbook and your statement don't match, verify your calculations and entries in your checkbook

register.

Your first goal must be to maintain accurate records.

1. From the balance in your checkbook register, subtract any service charges or fees listed on your statement that you haven't already entered in your register, such as ATM fees, cost of check orders, overdraft fees, or stop

payment charges.

2. Subtract any electronic funds transfers, such as insurance payments, car payments, or other bills you

automatically pay from your checking account.

3. Add any dividends listed on your statement that you've earned for

the month.

4. Add any direct deposits listed on your statement that you haven't already recorded in your register, such as

payroll checks, retirement checks, or dividends.

5. If your checkbook balance and your statement balance from step four agree, you are "in balance."

However, if they still don't agree, try the following:

Verify that the dollar amount of the items entered in your register agrees with the dollar amount of the equivalent items on the statement.



Compare register and deposit slips with your statement. You may have forgotten to write something in your register.



If the error is a whole number, check your addition and subtraction.



If the number is divisible by nine, you may have transposed figures.



If the balances still don't agree and you can't find the problem, make an appointment with a member services representative at your credit union to help you.

Help from your credit union

Some credit unions charge a fee for helping members balance their checking accounts, usually $10 to $15 per hour. If the account is in such a state that correcting the problem is overwhelming or the member is clearly having a problem with budgeting personal finances, the credit union may recommend a credit counseling service.

An essential part of managing your checking account is balancing it.

For example, Lisa Todd, manager of the share draft department at Suncoast Schools Federal Credit Union in Tampa, Fla., says, "If any of our members are having problems balancing their share accounts, we work with them; however, if they're having serious problems, we refer them to Balance, a credit counseling service

sponsored by the credit union."

Helpful hints to stay in balance

Review your checkbook register at least once a week to ensure that you've entered all checks, deposits, and other transactions. You can control your cash flow and know how much money you have in your account.



Enter the name of the payee and the amount of the check in your register before you write a check.



Place decimal points exactly where they should be to avoid calculation errors.



Keep all ATM, debit card, and deposit or withdrawal receipts together.

Why use software programs

If you have a computer, you might decide to follow the advice of many accountants who recommend easy-to-learn software programs to maintain your personal financial records and balance your checking account. These programs are beneficial at income tax time, too, because all your records are readily accessible and you can transport them into income tax software programs. Always keep an up-to-date backup

disk copy of your records in case you experience problems with your computer.

Once you've mastered the simple steps of keeping your checking account balanced, you'll enjoy the secure

feeling of knowing that you're in control of your cash flow.

July 9, 2001