How To Balance A Checkbook (2024)

Back when receiving paper statements from your bank was the norm rather than an anomaly, taking the time to reconcile your checking account records with your statement each month was an important part of keeping your finances healthy.

Now that all of your transactions are available immediately via your bank’s online portal or mobile app, you may assume that balancing your checkbook is the kind of skill that’s lost all usefulness, like knowing how to use a pencil to rewind an unraveled cassette tape.

However, even though the paper-and-pencil aspect of checkbook balancing has mostly gone the way of the dodo, the process is still a necessary part of maintaining your checking account. But whether you were a master checkbook balancer in the time of paper or are a digital native who didn’t realize paper statements were once a thing, you may not know exactly how to reconcile your accounts.

Here’s what you need to know about how to balance a checkbook in a paperless world.

Why Balance Your Checkbook?

Even today, when much (if not all) of your transaction information is available with the click of a button, it’s still a good idea to maintain a record of your transactions and regularly balance that record.

Balancing your checkbook, which is also known as reconciling your account, is basically about making sure that the records you have kept for your financial transactions match those the bank lists on your statement. There are several reasons for keeping such a record and balancing it regularly:

• Back when paper checks were more common, it could take quite some time for any one check to clear. Making sure you recorded checks as you wrote them and reconciled your account with the bank’s statement ensured that you were never caught flat-footed when an old check finally cleared.
• Though rare, banks do sometimes make mistakes, and regularly balancing your checkbook allows you to catch such errors in a timely fashion.
• You also can catch merchant errors more quickly if you reconcile regularly. If a vendor charges you the wrong amount for a purchase, you may not otherwise know if you don’t balance your account at least once a month.
• Keeping a record of your banking transactions can help you track your spending, making budgeting a simpler process.
• It also is easier to identify problems, such as missed automatic payments, incorrectly assessed fees, fraudulent charges and even your own mathematical mistakes, when you have a regularly balanced checkbook.

How to Balance a Checkbook

Balancing your checkbook used to be a chore reserved for a specific time each month: after receiving your monthly paper statement from the bank. With the statement in hand, you would compare the transactions you had listed by hand in your paper checkbook register with those shown in your bank statement.

Although this chore may look a bit different currently than it did our parents’ day, the basics of the job remain the same. If you have never before balanced your checkbook, you need to start by recording your transactions—starting with your bank balance:

1. Look up the “current available balance” in your checking account. You can find this information on either your bank’s website or through its mobile app. If you’re using a paper checkbook register, you’ll record this number in the top spot above the spaces you use to log your transactions.
2. Record any pending transactions that you know are coming but have not yet cleared. This includes debits and credits, as well as any checks you may have written that have not yet been cashed. You will write down the date of the transaction and a brief description and, in the case of checks, the check number.
3. For each debit, you’ll subtract the amount of the transaction from your balance. For each credit, you’ll add the amount. You’ll continue doing this until you have recorded all your transactions.
4. Don’t forget to account for any fees that you pay and any interest that you earn.
5. As you continue to make transactions, record them in your check register so you have a running tally of your debits, credits and total balance.
6. About once every two weeks (or more often), log on to view your bank account and compare your bank’s total withdrawals and deposits with your own records. If they match, then you have a balanced checkbook.

So what do you do if your numbers and the bank’s numbers don’t align? That’s when it’s time to backtrack through your records and the bank’s transaction history to see where the discrepancy is. Perhaps you forgot to record a transaction or you transposed a couple of numbers. The only way to discover the error is to go back to the last time your checkbook was balanced and work your way forward.

This is one of the reasons it’s a good idea to balance your checkbook more often than once a month, especially if you are newly adopting this financial task. You will have fewer transactions to comb through if you balance once a week or once every two weeks.

Digital Balancing Options

The old-school method of checkbook balancing assumed that you would carry a paper check register with you everywhere you went, and that you would record your transactions by hand. It also assumed that your transactions consisted primarily of paper checks going into and out of your account.

Today, there are many more ways for transactions to happen: from ATMs and mobile deposits, to automatic bill-pay (ACH transfers) and direct deposit of your paycheck. For these reasons, most modern consumers would rather use digital solutions for checkbook balancing. Happily, there are a number of ways to keep track of your banking transactions that don’t rely on pen and paper:

Daily Online Check-In With Your Bank

Since banks are able to update the transactions that clear your account in real time, you can recreate much of the same benefit of keeping and balancing a check register by simply logging into your account online every day. This will allow you to see all of your transactions within 24 hours of making them, so you can detect mistakes and errors quickly, and you’ll have a consistent idea of your current balance.

If you struggle to get into this kind of habit, a number of modern banking conveniences can help remind you to check in once a day. For instance, the majority of modern banks offer smartphone apps that allow you to easily check your balance, see your transactions and even deposit checks via your phone. You also can sign up for email or text alerts that will let you know everything from when your transactions clear to what your current balance is. These amenities make it very easy to check your banking information each day.

However, there are a couple of downsides to using a daily check-in as an alternative to checkbook balancing. For one, if you still use paper checks, this method does not account for them. You may overdraw your accountif there is an outstanding check that you forget about. In addition, it is harder to find banking errors if you do not keep your own records, since you will be working from the bank’s numbers at all times.

Using an Account Aggregator

There are a number of programs availablethat will automatically track your banking information for you, such as Mint.com and Personal Capital. These aggregators allow you to see an overview of all of your financial accounts in a single place, from your checking and savings accounts, to your loans, to your college savings account. Such an aggregator will do the tracking and recording for you, so all you’ll have to do is check it regularly and compare it to your banking information to make sure everything balances.

Aggregators can be a great tool for anyone who wants to get a big-picture sense of their money. However, they can lull some people into believing that they are staying on top of their money chores because the aggregator does so much for you. If you simply let the aggregator do the work and never stop to check in, this kind of program will not replace manual balancing. You need to know what your money is doing and make sure you compare your (or the aggregator’s) records with the bank’s records.

Using an Open-Source Spreadsheet

One of the reasons why balancing your checkbook has become passé is because most people no longer carry a checkbook, or even paper and pencil. This means you have to remember to write down transactions when you get home, rather than record them as you make them, which is onerous and also a good way to forget transactions.

What you probably have at all times, however, is your cell phone. You can create your own transaction register on an open-source spreadsheet platform, such as Google Sheets. This will mean you can access it from your phone, allowing you to make note of your transactions while you’re out and about. You also will be able to access your spreadsheet from your laptop when you’re ready to balance it.

Using an Accounting Program

If you’d like the accountability of recording your own transactions but need a little more structure, you might consider using an accounting program, such as Quicken or YNAB. These programs may automatically populate some transactions, but there is still plenty of manual recording you can do with them, both on your computer and your phone. The benefit of a program like this is that it often will nudge you to complete your necessary tasks, and it will walk you through the process of balancing your records.

Balancing Your Checkbook Is Essential

Though both parts of the word “checkbook” are quickly becoming meaningless, being able to reconcile your accounts will always be an important part of financial health. Plus, with the addition of digital banking services like automatic bill payments and mobile deposits, it’s critical to know when your money is in motion.

Not only does tracking your transactions help ensure that you are aware of how (and when) money is flowing in and out of your account, but also it gives you the baseline you need to detect problems and plan ahead financially. It may be that only old-school account holders still record and reconcile paper checkbooks by hand. But there are a number of options available to help you record and balance your accounting in order to stay on top of your finances.