You swiped your debit card here, you took money out there, paid cash at this store, at the end of the day you’ve spent X amount of dollars and next week it will hard for you to remember one, where you spent the money, and two, how much the purchase was. So what is the best kept secret to keeping track of your finances?….Balancing your checkbook!! But how do you do it?
Tips to properly balance your checkbook:
1. First you’ll need to get your check book handy and check your checking account balance. Write that number down in the top right hand corner.
2. Going forward, you will start to record your purchases. There are multiple columns in a check book, one if for the description of the transaction (i.e. Groceries), the date of the transcription, the check number (if applicable) and the important part a column for debits and credits.
When purchasing something with a check, you fill out the corresponding check number, the description, the date of purchase, and the amount of the purchase in the correct column, in this case writing a check where money is being removed from your account is considered a debit.
When purchasing something with your checking card, you will again record all information required above and record this charge as a debit since you are removing money from your account.
Lastly, when adding funds into your account, whether that is a pay check or cash, you will fill in all required fields; again the description of the transaction, the date, the amount and you would record this as a credit.
Note: If the purchase changes the funds available in your account, it needs to be recorded in your checkbook.
3. Regularly recalculate the balance of your account. When I say regularly I mean monthly. When you sit down to pay bills go back and make sure all debits and credits are adding up to what you have recoded as funds available
4. Reconcile your checkbook at the end of every month. Review and compare what you have recorded to what your bank statement reflects. Record any interest you have earned on your account as a credit and any bank charges you have on your account as a debit.
5. Correct any mistakes you may have made in recording your debits based on what your bank statement reflects.