- When you balance a checkbook, you compare your bank statement to the records in your checkbook.
- Balancing your checkbook may help identify errors and keep track of payments.
- If you don't use physical checks often, you'll still want to monitor your spending.
Keeping tabs on how you spend is crucial to achieving financial goals, big and small. If you commonly write checks to pay bills, you'll want to balance it out each month to understand your spending habits and manage your checking account.
Importance of checkbook balancing
Balancing a checkbook means comparing a checkbook to a bank statement and reviewing bank transactions. Balancing a checkbook may also help bring attention to any banking errors.
You'll need your checkbook register, checking account statement, and a calculator.
If you choose to opt out of paper statements from your bank to avoid paying a monthly bank maintenance fee, you may print your online statement or download it from your online account.
Step-by-step checkbook balancing process
You can follow our step-by-step guide to balancing a checkbook if it's your first time doing this process or if you need a quick refresher.
1. Review your checkbook register
To balance a checkbook, you'll have to fill out your checkbook register routinely.
The checkbook register, also known as your checkbook ledger, is a booklet in your checkbook where you'll record details about checks you've written out.
You should record the following information in your checkbook register each time you write a check:
- The date: This is the day you wrote your check.
- The check number: Each check will have a number listed on it. This can help keep track of your payments.
- Payee: This is the person you paid.
- The check amount: This is how much you paid your payee.
Checkbooks come with a carbon copy, which is paper behind your check that leaves behind a copy of what you write on it. Flip through your carbon copies if you forgot to list something on your checkbook register.
Even though recording these details may seem tedious, it can help you monitor your spending.
Maggie Gomez, a CFP® professional and owner of Money with Maggie, says if you're recording your spending properly, you should have a better sense of how much is in your checking account, and you won't be surprised by bank transactions.
2. Record any missing transactions
There are different ways to calculate your bank transactions. You may use your checkbook ledger, the back of your bank statement, a notebook, or a spreadsheet.
The process for each method starts the same: Write down the statement balance that you had at the beginning of the month.
If you use your checkbook, you'll go line by line and either subtract or add each check. You'll also write down any debit card or bank transactions for the month.
If you're not using your checkbook, go through your checkbook and add up all your bill payments for the month. Then, you'll go through your bank statement and factor in any other transactions not listed. Expenses should be subtracted from your total, and payments should be added.
3. Compare with your bank statement
Now you'll be able to compare your check register to your bank statement. The total from your calculations should match your balance on your bank statement.
4. Adjust for outstanding checks and deposits
If you have pending checks not reflected in your statement, return to your check register to add the withdrawals back to your current balance and subtract the deposits from your current balance. The remaining amount on your check register should match your bank statement.
Check writing best practices
Checks aren't the standard form of payment for the digital generation. Here are tips for writing proper checks:
Check writing components
Most sections on a check must be filled out completely for it to be accepted for deposit by a bank. These include:
- Check date
- Name of the recipient
- Payment amount written in numbers and in words
- Signature of the payor
- Endorsement line, signed by the recipient before deposit
The memo line, where you can write the purpose of the check, is optional, though it's helpful for checkbook balancing and recordkeeping.
Security tips
Here are a few tips to avoid potential security issues with your checks, such as fraud:
- Always use dark pen ink to fill out a check so that your writing is legible and cannot be erased.
- Do not offer a blank check to anyone unless you have added an authorized signer.
- Keep your signature on the line so the check's security feature, the Magnetic Ink Character Line, can be identified by the bank.
- If you make a mistake, write VOID across the check, tear it up, and throw it away.
Check endorsement
A check's recipient must sign, or endorse, the back of the check before depositing or cashing it.
If you're using mobile deposit, your financial institution may share specific instructions, such as writing additional text near your signature or checking a box to authorize the check for remote deposit only.
Challenges in balancing a checkbook
If you need help correcting discrepancies in checkbook balancing, here are the most common errors that occur while balancing a checkbook and how to resolve them.
Bank interest and fees
If your check register for the month doesn't match your statement balance, it could be because your account was charged a common bank fee or credit card interest. Review your bank statement and subtract any fees and interest.
Forgotten transactions and math errors
You may need to run your calculations more than once to double-check for any math errors. If you're still having trouble balancing your checkbook, consider calling your bank to ask about any pending transactions that are not showing up in your account or that you may have forgotten about.
Tips for easier checkbook management
Reviewing and updating your checkbook
Immediately recording information about each check you write and receive is essential. You may end up forgetting if you wait until the end of the month.
Digital tools for checking book balancing
If you don't regularly write checks, balancing a checkbook may not be necessary.
Gomez recommends reviewing your spending consistently through a spreadsheet or budgeting app.
Checkbook balancing FAQs
It's important to balance a checkbook to view your spending each month and review your checks for any errors. Regularly reviewing your account activity can also help you detect bank account fraud more quickly.
If you regularly use checks, you should try to balance your checkbook each month as soon as you receive your bank statement.
If your checkbook doesn't balance and your math isn't the issue, check your bank statement to see if there are any checks or payments that haven't been processed yet. You may have some information on your bank statement that isn't updated if you just sent a payment. You can also check your carbon copy checks to ensure you didn't write the wrong number on your bank register.
Mobile banking apps and personal finance software can help you closely monitor your daily spending habits.
Record transactions in your checkbook ledger at the time they occur, regularly review your bank statements, and consider financial management, online bill pay, or budgeting apps to stay on top of your spending in between billing dates.
