How to Balance a Checking Account

It should surprise me just how many people don't bother to look at their bank statements—but it doesn't. I understand that we're all busy, and opening mail from the bank we love and trust just adds to the number of tedious chores that seem to consume all of our free time. This is one chore that should be an exception for one simple reason: it might just be able to save you hundreds of dollars.

Consider this: the typical bounced check (or overdraft) fee runs between $25 and $35. Do this twice a month, and you've suddenly encountered the cost of an entry-level cell phone bill. Sometimes it's not even your fault. Businesses are notorious for "accidentally" taking double or triple payments due to 'billing errors.' My own insurance company recently did just this, which is why I mention it. It REALLY happens, and it's the poor individual who doesn't at least give their bank statement a quick peek each month that pay the price.

You work hard for your money, don't let it slip away. The vigilant Finance Creep can easily avoid feeling pain from these mishaps by taking 5 minutes each day to complete a simple check register.

I've included a link to a good template. It is completely free, compatible with MS Excel (or OpenOffice Calc), and no, was not created by me.


You can check your recent account balance either online, by phone, or ATM and enter it as your starting balance. Then, as you write checks, take out cash, transfer funds, or make electronic payments simply enter the amount into the register, along with a brief description to let you know what it was for later. Then, as you get paid, make deposits, or receive interest you can enter that too. The account balance will automatically update based on the information you enter letting you know exactly how much money you have left to work with. (Make sure you don't skip entering the date! This is important for comparison later on.)

Now for the tricky part: there's a column labeled "C". This stands for cleared! At the end of each month, you have to take your bank statement, open it, and check off each transaction from the account that actually showed up (usually with a simple "X"). You'll be able to see, over time, whether any checks you've written have failed to clear the account.

This is where so many of us who rely on glancing at our online bank balance get thrown off. Sometimes checks we write months ago (up to six months legally in most states) get drawn on the account, throwing everything we've done recently off and causing payments to bounce.

When everything is marked off as being cleared you can compare the balance on your statement to the one in your new register. Is it the same? If it's not, why? Did a business overcharge you? Was there an unexpected bank charge or other fee? Or, did you miss entering something into the register in your haste one morning before work? It could even be an error in your favor where you forgot to enter the $100 check your friend gave you for your birthday.

Any of these things are possible, and since it's your money, it's in your best interest to figure out what happened. Banks can fail, businesses make mistakes, and I can say with almost 100% certainty that nobody will care about your money as much as you do.