06.14.08
Checking Basics 101 – Balancing Your Checkbook
I think that the easiest way to do this is to take you through it step by step. Since many folks get their statements electronically these days, I will use the form that BCSalliance.com provides, which you can print out here
The first thing you should do when you get your new statement is take your checkbook, and make sure every item on the statement gets a tick on your check register (there is usually a column marked with a check mark for doing this).
Next, go to the form. (For this section, I will use a recent statement reconciliation of mine as a guide.)
BCSalliance.com Reconciling Checking Account
The first thing is to enter your checkbook balance on line (a). Next add any interest on line (b) and subtract any fees on line (c). The result of this will be line (d), your new checkbook balance.
Checkbook
Checkbook balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) $116.98
Add Earned interest income . . . . . . . . . . . . . . . . . . . . . . . .(b) -0-
Subtract Service Charges / Fees . . . . . . . . . . . . . . . . . . . . .(c) -0-
New Checkbook Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . (d) $116.98
Next, go to your statement. Put the balance from your statement on line (e). List the outstanding checks and ATM withdrawals [and fees] from your checkbook [these are the items that you have not checked off], and total them. This total goes on line (f). Subtract Line (f) from line (e) for your subtotal. NOTE: If this subtotal is negative, DO NOT PANIC. It doesn’t necessarily mean you have screwed up.
Bank Statement
Statement balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(e) $500.70
List outstanding checks . . . . . . . . . . . . . . . . . . . . . .. . . . . .(f) $1941.00
Check No. Amount
139 $1150.00
000037 $100.00
5/5 $100.00
132 $575.00
131 $15.00
Subtotal [subtract (f) from (e)] . . . . . . . . . . . . . . . . . . . . . (g) ($1440.30)
Next, list the deposits [and any checks you have reversed] that have occurred since the date of the statement. Total them and place the total on line (h).
Total of unrecorded deposits . . . . . . . . . . . . . . . . . . . . . . . . (h) $1557.28
Date Amount
5/12 $482.28
5/12 $500.00
Void 132 $575.00
Add lines (g) and (h). If (g) was negative, subtract it from (h). This total should be the same as the balance in your checkbook.
Checkbook should show this balance . . . . . . . . . . . . . . . . . . .(i) $116.98
It’s just not that hard to do. I am a mathophobe, so I use a calculator to do my adding and subtracting. The first time or two, it might be a bit uncomfortable, but that happens with any new habit or skill we try to learn.
Finally, I have a couple of shout-outs and a small plea for help to make: First, as always, to my mother, who taught me the fine art of doing this by letting me help her do hers when I was a kid. Second to Marc S. Glasser, a superb researcher and copyeditor, who called me back (within 30 minutes) with a ton of resources when I called him in the middle of a workday re online reconciliation forms. Third, I am pretty new to HTML, so if anyone can tell me how to tweak the form so that it looks better, I would appreciate it very much.
Now that I’ve broken down the process, are you willing to try it yourself? I would love to hear your results, or any questions that arise.
A note to my readers
A friend of mine, Peter A., just posted a wonderful but friends’ locked post on his experiences with this process, and has kindly granted me permission to quote three of the sections that I found particularly relevant. Thank you, dear Peter, and I wish you continued success!
Section 1: “The Graph: My wife had saved years’ worth of credit card bills. We plotted the balances from the previous years in an Excel bar graph. It was a visible mountain of debt. We posted it on the fridge, updating the balance every month. When the debt started to decline, we could see it–every time we opened the fridge we saw both the size of the problem, and our progress toward solving it. There was often a fingernail-embossed line extrapolating down to zero, “the day when freedom come.” Because that graph was at the heart of our household, we were always thinking about what to do to bend that line down.”
I love this idea. If I still had all my tons and tons of papers, I’d probably do it. It’s a great way of being accountable to yourself, and acknowledging how far you have come at the same time!
Section 2: Clutter: Things don’t only cost money, they cost space. Every purchase not only has a dollar cost, but a cubic foot cost. If a purchase is irresistable, consider the space.”
Absolutely. And whether or not you have the space, that’s a great touchstone. By the way, getting rid of the clutter you already have is known to free up a lot of concurrent mental clutter. I’m not about to ditch all my possessions and go live on a mountain somewhere, but when I finally do move out of where I am now, I hope to have to take only about half of what I had to move last time.
Section 3: “Recognizing the illusion of ‘people like us can afford it.’ When someone you view as a peer says ‘it’s pretty cheap at just $150.’ that means nothing. I can’t tell by looking if they make twice my salary, or have half my living expenses, or are in far worse debt than I am. Affording something is a personal issue of my current bank balance, cash in my wallet, my expenses and my priorities.”
This is just an amazing insight. It seems to me so obvious, now that I ma fairly well along the process, but if you had told me this even a couple of years ago, I would not have heard it. It’s very hard, sometimes, to realize what goes on behind the scenes in other folks’ lives. And it is our nature to want to be included. I wouldn’t be surprised if it someday turns out that 50% (or more) of most people’s debts spring from this one. I’d say about 60% of mine did.
Again, thank you, Peter A. for letting me quote you on this!
Where do you see the bulk of your overspending stemming from? Have you given thought lately to how to declutter your space and your life? What tips do you have for holding yourself accountable and for acknowledging your milestones in this process?
