Learn About Balancing A Checking Account (and Checkbook); It’s Easier Than Ever!




balancing a checking account
Photo by Tim Photoguy on Unsplash

Balancing a checkbook is an essential basic life skill that everyone needs to know to master their financials. Especially if you want any chance of successfully budgeting, investing, and saving more money for your future.

Have dreams of owning your own business one day?

Every successful business owner needs to know a bit about basic finance to succeed and move their business to the next level. Learning how to properly balance a checking account for your personal life is a great place to start. (Though, depending on how complex your business is, you’ll most likely still require help from a CPA and Accountant.)

The main takeaway I’m giving you in this article is this: To have any financial success as a working adult or business owner, you need to understand the basics of balancing your checking account. The earlier you learn this, the more successful you will be financially!

Let’s dive into it then!

The Exact Meaning Of Balancing a Checkbook

The exact meaning of balancing a checkbook is this: You are keeping a record of all the checks, debits, and credits that hit your account. What you have in your record should also match the statements you get from your bank.

The end goal is to make sure that the account balance you have recorded always matches the balance of the bank reports that you have in your online banking and monthly statements. 

Otherwise, you’ll have an increased chance of bouncing a check or overdrawing your checking account balance to a negative balance.

In other words, you’ll run out of money!

You also want to verify the bank is not making a mistake or overcharging for fees. Likewise, you can also make sure that merchants you are buying products and services from are not overcharging you!

To see a more technical term about balancing an account, review this short reference article on Wikipedia (Balance and Accounting).

2 Strategies For Balancing Your Checkbook

There is more than one strategy to use when balancing your checkbook. Depending on where you are today with your finances, I recommend you start with the most basic form which requires you to write things down into a printed worksheet and use a pocket calculator.

As you progress your skills you’ll be ready to use an app. If you are already good with numbers, you might be better off just using an App right away. You choose!

Strategy #1: Balancing a Checkbook With An Online Activity Worksheet

Check out this checkbook balancing worksheet from Chase as an example of how to manually balance your checking account step by step. Every bank has one you can either download or use on the back of your printed statement.

When gathering your transactions to start recording them, you can reference your bank account’s printed monthly statements or your online banking app.

The most important items to track on the worksheet are various transaction details like the date, reference, or check number, a description of the transaction, the exact amount, and the current balance. You’ll add or subtract the exact amount to figure out your new current balance depending on if it was a deposit or purchase that you made.

This is where a basic calculator comes in handy! Try using your smartphone’s calculator app, or a good old-fashioned pocket calculator.

Your desktop computer even has a calculator app!

As you learn the basics, eventually you can get away from a pen and paper and just use a Microsoft spreadsheet to input your numbers. A Google Spreadsheet will work just fine too and won’t require you to buy any software.

Just match up the columns to your various transaction details in your spreadsheet and you’ll be good to go!

Strategy #2: Personal Finance Software Makes Balancing Your Checking Account Easy

Once you learn the basic calculations and transaction details of balancing your checking account from the previous strategy, you’ll be ready to use a money management app to feed in your transactions from your online banking account.

The advantage of using an app is that it will do all the calculations for you and allow you to just verify the accuracy of each new transaction that comes in. Then you can set up categories and actually easily track your spending and make a budget with various goals for saving money, etc.

To get started with apps there are two that I highly recommend.

Mint Finance App

Mint is an online personal finance and budget app that was acquired by Quicken. It’s a great entry-level way to start managing your finances and tying in your checking, savings, and credit accounts all in one place. The downside, you’ll still need to keep tracking your transactions with a separate record like a spreadsheet since it does not have balancing (reconciliation) built into it.

Quicken Finance

Quicken personal finance software is another great choice. The basic plan starts off around 35 bucks per year for a full personal financing solution. They’ll be a bit of a learning curve but you can start balancing your account with ease by following these reconciliation instructions by Intuit.

Then, you can ditch your spreadsheet!

Bottom Line: If you’re willing to pay for Quicken, I recommend skipping Mint altogether because you’ll still have to use a separate record!

More Resources For Learning About Balancing Your Checking Account

Here are some quick resources to expand your knowledge on balancing a checking account and reconciling an account.

How To Manually Practice Balancing a Checkbook

Additional News Links From the Media

Dozens of States Pushing to Add Financial Literacy Classes For High School Students

Final Thoughts

Understanding the basic fundamentals of manually balancing a checking account and checkbook is essential. This way you can understand behind the scenes what is going on with the calculations.

Then, move on to using accounting software such as Quicken that will organize and automate a lot of the calculations for you.

By knowing how to manually do the calculations as well, you’ll easily be able to identify errors in your accounting software and know how to fix them easily by making manual adjustments from time to time.

I hope you got something out of this article, have fun balancing your checking account!


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