Back to the time when receiving paper statements from your potential bank was the norm rather than an abnormality, taking the time to balance your checking account records with your statement every month was a sign of keeping your finances healthy.
Now that you can frequently access all of your cash transactions via your bank’s online portal, you might assume that balancing a checkbook is a hectic chore that has lost its usefulness completely. However, manually balancing the checkbook is still a mandatory part of maintaining your checking account.
If you use a checkbook, it is essential to keep it balanced. Balancing a checkbook is far easier than we think, requiring only facile addition and subtraction details. Balance your checkbook by recording all cash transactions to your bank account. Divide cash transactions into two categories, mainly deposits and withdrawals. These factors highly influence the addition and subtraction process. Balancing a checkbook refers to knowing the exact amount of cash in your bank account to make the related decisions without errors. Follow the below steps to understand how to balance a checkbook.
Recording Your Cash Transactions
The initial step of balancing a checkbook is to list every cash transaction as it occurs. Every check you write and deposit you make, including debit card swipes, ATM withdrawals, and curricular bank fees, will be enlisted in the records. Always maintain a running balance by reducing the withdrawals and adding the credits.
Reviewing the Monthly Bank Statements
The second step is to update the checkbook register upon receiving the monthly bank statement. Start with the report’s top and work to the end, one transaction at a time. As you spot the cash transaction in your checkbook journal, place a checkmark in the provided column.
Once you carefully review the bank statement, you can spot any missing information from the checkbook register. For instance, if you instantly grabbed $30 at the ATM to update it in the journal later but then forget, you’ll notice the cash transaction listed on the bank statement but not on your register. You can later add that cash amount to your journal to correct the balance.
Address Existing Issues
When your balances don’t match, go through every transaction and carefully determine the occasional errors. Making mistakes is human nature, especially when trying to make calculations in your head. Ask a bank representative for assistance if you cannot locate the variations.
Draw a Line in Your Journals
Now that you’ve balanced the checkbook journal draw a line under the last cash transaction. Also, you can label the available space in the front with the date. This will make locating the beginning point for your upcoming bank statement easier when you receive it.
Register Your Bank Statement
The final step includes registering your bank statement for protection purposes. The IRS suggests saving key documents for up to seven years. Since banks must keep your account records for five years, you might not want to rely on electronic records forever.
Importance of a Balanced Checkbook
You might wonder why maintaining a checkbook register is essential if you can quickly get an update through online banking portals. These services won’t update you with your outstanding checks, precisely the ones you made but didn’t process by the banks.
Why Should We Maintain a Checkbook Regularly?
Balancing a checkbook is an outdated task, and the quick services of online banking portals have made tracking cash transactions much more effortless.
Truthfully, no one likes to record cash transactions and deposits manually every month. Indeed, online applications can help you manage your money quickly. However, there are still a few possible reasons why manually balancing the checkbook is a productive part of your financial regime. You might need to backtrack further if you don’t review your checkbook correctly.
Conclusion
In summary, while online banking has made it easier to access and track financial transactions, manually balancing a checkbook remains crucial to maintaining a healthy financial status. The process involves recording all cash transactions accurately, reviewing monthly bank statements, addressing discrepancies, and registering statements for long-term record-keeping. Despite the convenience of online banking, manually balancing a checkbook ensures that all transactions are accounted for and helps identify any discrepancies or errors that may arise.
Additionally, it provides a comprehensive overview of outstanding checks, offering a more accurate representation of available funds than online banking portals alone. Thus, while it may seem outdated, balancing a checkbook remains essential to personal financial management, offering peace of mind and financial clarity in an increasingly digital world.
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