AGS Financial Services - Checkbook Balancing Made Simple

One of the most critical things one can do for their finances is to balance their checkbook EVERY month. Shockingly, after talking with several bankers who told me they receive several calls a week from customers who have had check bounce demanding that the bank pay their bounced checks. Each time they suggested that the customer come in with their cancelled checks, their checkbook register and their bank statements. Quite often the customer turns around asking what is a check register?

To verify this, I took an un-official survey of my professional practice clients and found a whopping 30% had not balanced their checkbooks in years and even decades. Some responded as the bankers' customers - what is a checkbook register?

Hence, the need to learn how to not assume anything. Again, there are no schools nor colleges that teach checkbook balancing and banks offer to go over this with theirclients, yet the clients ignore the help until it is too late - bounced checks ... and fees.

Let's begin at the beginning:

1. Gather the items needed
          - your checkbook and the check register
          - bank statement(s)
          - pen, pencil, eraser
          - calculator

2. Match-up the Bank Statement vs. the Check Register, comparing each and put check marks next to those items that agree
(The check register should already have selected information when a transaction was completed. That is when you write a check, you should fill out the information in the checkbook register AT THAT TIME. The information you want to include is the date of the transaction, the description of the transaction or to whom the check was written to, the amount of the transaction, the purpose of the transaction in the memo section and the corresponding balance of the account after that transaction has been included.) So match up each of the:
         * Payments / debits or checks, ATMs, transfers
                    - do one by one from the bank statement to the check register
         * Deposits / credits
                    - do one by one from the bank statement to the check register
         * IF SOMETHING DOESN'T AGREE
                  - review the actual check vs. the check register vs. the bank statement
                  - review the deposit slip vs. the check register vs. the bank statement
                  - call the bank, credit union or institution

3. Update check register from the bank statement adding
          - interest or dividends
          - fees, late charges
          - other items

4. Check that all transactions (payments / debits and deposits / credits) on the bank statement have been accounted for in the check register

5. Copy bank statement final balance to the box on the right and in section "A"

+	A $
+	B $
=	C $
-	D $
=	E $

6. In your check register, add up all of the deposits, transfers INTO the account and other credits that do NOT have check marks next to them and copy this total to the box on the right and in section "B"

7. Add box "A" and box "B" together and copy this total in the box above and in section "C"

8. In your check register, add up all the checks, ATMs, Debits, transfers and any other debits that do not have a check mark next to them and copy this total in the box above and in section "D"

9. Subtract box "D" from box "C" and copy this total in the box above and in section "E"

10. The total in box "E" should equal the final balance in your checkbook.
         * If it does, you have balanced your checkbook. Congratulations.
                  - Suggest that you mark in your checkbook the date of the balancing, the words "Bank Statement" and the date of the bank statements, and the word "CORRECT" and re-copy the balanced figure from box "E"
         * If box "E" does NOT equal what the check register final balance is, then, time to search for one or more errors
                  - what is the difference between the amount in the box "E" and the amount in the check register? Are there any amounts in the check register or the bank statement that matches this figure? Or is it double any figure on your statement or in your checkbook register or one half any figure?
                  - go back and start fresh from the beginning re-checking everything marking all transactions one by one again matching them up with the bank statement
                  - re-add outstanding deposits / credits and compare with box "B" again
                  - re-add outstanding payments / debits and compare with box "D" again
                  - re-add boxes "A" + "B" comparing with box "C"
                  - re-subtract box "D" from "C" comparing with box "E"
                  - re-check the individual transaction additions and subtractions in the check register since the last bank statement balancing
                  - if an error is still not found, call the bank, credit union or institution or yell real loud for assistance

Usually, I've found with my clients who've gone through the process of checkbook balancing for the first time in years, that they may have to create a starting point in their checkbook register which is fine. Then I suggest to do a checkbook balancing each month with that "new" total for three months. At that point, any discrepancy should have been determined and how you may want to treat it.

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