Balancing Your Checkbook

by Charlotte Wood
(last updated February 21, 2009)

When you get your first checking account you may feel liberated and financially independent. You have enough money to merit a checking account and it should be assumed that you have enough responsibility to handle having a checking account. I worked at a bank for a couple years in high school and so I got my first checking account pretty early, having to learn crucial financial lessons early on in my fiscal life. One of the most vital things to know how to do and to consistently do is balance your checkbook; without that you have a much greater risk of digging yourself a financial hole.

Balancing a checkbook may seem daunting to some because it's dealing with real money and real financial obligations. The principles of it however are simple and really just go back to simple addition and subtraction. Balancing your checkbook, simply put, is just knowing how much money you have available. The way a checkbook register is set up is from left to right: a date column, a description line, debits, credits, and the final balance.

Here's a quick terms review:

  • Debit: money coming out of your account
  • Credit: money coming into your account
  • Balance: the money you have after reconciling your debits and credits

Enter every debit and credit on your account into your register because then you can have everything going on with your account right in front of you in one spot instead of having to scramble to find receipts and pay stubs. Don't forget automatic payments and deposits; those easily fall through the cracks and are just as important to remember as your other fiscal commitments. As a general rule, take your debits into account before your credits; you don't want to put money into your register prematurely. (Also give attention to holds on your account; your bank may hold funds for a day or two depending on their deposit policy. Make sure you know what's going on with your bank and their different policies).

Once you know what's coming in and out, you simply reconcile all that activity to reach your balance. This doesn't necessitate high level math, but rather just basic addition and subtraction. Balancing your funds can get overwhelming if you put it off and collect a bunch of debits and credits that are helter-skelter. The best way to keep your checkbook balancing easy is to start and keep with it as soon as you open your account, that way you don't have to put yourself in the dark regarding your account activity and you can keep financial confusion to a bare minimum.

Balancing your checkbook is the first step in starting off on the right financial foot when you open a checking account. Remember these simple instructions and you have every capability of being financially sound!

Author Bio

Charlotte Wood

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