I came across this next question/answer segment in a newsletter I read this morning. I thought it was such a great thing to pass along as I am sure there are more of us that don't reconcile our checkbooks often enough, or even know how to. - Tamra (a.k.a. The Frugal Mom)
Q - Dear Mary,I have an "embarrassing question" for you. I will soon be 70-years-old, and I have never been told how to balance a checkbook. People just assume I know. Is it too late to learn? Bobbie Y., e-mail
A - Dear Bobbie,You're not the only reader who's ever been embarrassed to ask a question about money and finance. I filled a book with these questions and my answers. A great book I would recommend is "Can I Pay My Credit Card Bill With a Credit Card? And Other Financial Questions We're Too Embarrassed to Ask!" I think you'll have fun reading it, and you'll learn a lot in the process.
You should balance your checkbook monthly to catch the bank's mistakes. There are great software programs and online tools that will do this for you. Some of them are free. Check out Wesabi.com, Mint.com and Quicken.com. Here are the basic instructions to reconcile your checkbook against the bank's statement:
Step 1: Determine if you have outstanding checks that haven't cleared your bank. Using your statement, check off your cleared checks in your checkbook register. Make sure that the amount of each cleared check is the amount you recorded.
Step 2: Verify that each deposit recorded on your bank statement is also recorded in your check register, including your direct deposits. Make sure the statement shows all deposits you made. Check off your deposits just as you did for your checks.
Step 3: For ATM withdrawals or debit-card purchases, check off each transaction on the bank statement against your check register. If your statement has items that have cleared that aren't in your checkbook register, record them now.
Step 4: Check your bank statement for bank fees, such as monthly fees or those for (gasp!) bounced checks, and record them in your register. Record any interest earned in your register, too.
Step 5: Go through your checkbook register or duplicate checks and list checks that have not cleared the bank. These will not be listed on your statement. Make note, also, of outstanding debit-card purchases or ATM withdrawals that have not cleared the bank. Total all of these items.
Step 6: List any outstanding deposits that were not included on your bank statement. Total these deposits.
Step 7: Using a piece of paper, your checkbook register, or the form on your bank statement, list the ending balance shown on your bank statement. On another line, enter the total outstanding deposits. On a third line, enter the total amount of your outstanding checks.
Step 8: Using a calculator, enter the ending balance on your statement. Add the total for outstanding deposits. Finally, subtract the total for outstanding checks. This should equal the balance shown on your checkbook register. If you have never reconciled your checkbook, this will be your new balance from which to start.
*information taken from the Everyday Cheapskate Newsletter
7 years ago