I was on a break from work yesterday, and I simultaneously shoved forkfuls of salad into my mouth while I stared as my coworker meticulously copied each number from every receipt in her purse into her checkbook. I was stunned, transfixed by the preciseness of it all.
Neither my high school nor college classes ever taught me how to balance a checkbook. I opened a checking account somewhere around junior year of high school, but after that, and all through my twenties, I solely kept my accounts in order on a wing and a prayer
In my thirties, I have a higher checking account balance across the board that I’m more aware of and I love logging in to chase.com and making sure everything is in order (but that’s just me). I also use credit cards a lot of the time (Should You Use Lots of Credit Cards in Your Thirties?), and then pay them off every month, so I don’t think much about overdrafts.
However, I still really dislike budgeting, which I write about here in Budgeting in Your Thirties When You Hate Budgeting, and I’ve never learned how to balance a checkbook. The whole checkbook balancing thing just seems so quaint and old fashioned, but I think it’s actually helpful to know. So I went on a google search and landed at dummies.com, where I clicked on How to Balance a Checkbook.
I’ll dumb the whole process down even more than dummies.com, since I like topics- especially financial topics- to be in the most basic lamens terms for me. So balancing a checkbook is kind of like making a budget backwards. When you make a budget, you are laying out the future of your money. When you balance a checkbook, you are documenting the past.
So, to balance a checkbook, simply:
- Write down, at the end of the day, the total money that was in your bank account at the end of yesterday.
- Write down, in the little tiny spreadsheet in the back of your checkbook, every single cent you spent today. Go through your receipts in order to know what you’ve spent.
- Write down every cent you autodebited from your account today- you may not have a receipt for that, so keep track of autodebits (such as rent, student loan payment, credit card payment, amazon.com subscriptions) somewhere.
- Subtract ALL the money spent today from the total money that was in your account yesterday.
- If your total is now below zero, you have an overdraft, and that is bad. Try not to let that happen again, by creating a budget for next time.
That seems to be the gist of it. If it sounds tedious, you can probably avoid the whole thing by making a solid budget and sticking to it. Also, check your bank balance regularly, and try to keep a higher balance in your account if you can. I know that’s a bit vague and imprecise, but the times where you’re most in danger of an overdraft are when you stray from your normal spending routine, such as if you lose your job, or when you’re traveling, or when you move, or if you have to make a major emergency purchase- like paying a sudden hospital bill. So be extra vigilant with your account during times like those.
That’s all I got on balancing a checkbook. What do you guys think? Any of you balance a checkbook yourself and have some helpful hints?