How to Reconcile a Checking Account
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It’s amazing that so many people use debit cards and withdraw money from ATM machines without keeping a record of these transactions. There is a register in your checkbook for this very purpose. It is imperative if you are to plan well financially to keep your check book in agreement with your bank statement.
What You Will Need:
Your checkbook.
Your most recent bank statement.
Paper and pen.
A calculator.
If you have it financial planning software on your computer.
Step 1
When your regular bank statement arrives in the mail, schedule time soon afterwards to go through it and reconcile it with the register of debits in your checkbook. If your checkbook and statement agree at first glance, you are a genius. Give yourself a pat on the back and proceed no further.
Step 2
If they don’t agree which is more often the case you need to do some work! Gather your materials together. You need 1) checkbook 2) statement 3) ATM receipts. It’s important to keep them. 4) Paper and pen 5) a calculator.
Step 3
Take a sheet of paper. Draw a line down the middle. In the left column write down all the items that have been charged to the account. These are debits. 1) Checks written 2) debit card purchases 3) ATM withdrawals 4) Bank charges and fees. Add them all together and write the total at the foot of your column.
Step 4
On the right side list all your credits 1) checks received 2) other deposits to the account 3) interest payments. Again add them up and enter the entirety.
Step 5
At the bottom of the right hand side below the credit total enter the credit sum and the debit total. Subtract the debit from the credit and write down the answer. This figure should agree with the numbers on your statement. If it does, brilliant! The chances, however, of this happening are slim because there is a time lag between the time the bank’s computer printed off your statement and you sitting down to complete the reconciliation.
Step 6
Check the entries in your checkbook with the statement. You have written more checks; made debit card withdrawals and possibly taken cash from the ATM One the other hand you could well have received income into your account. Subtract the debit from the credit and you should have agreement. If not you will have to hunt through the register and statement to establish whether you have forgotten to record payments or income. If there is a very small discrepancy, you could just leave it.
Step 7
Now write into your checkbook register the reconciled total. This is your new starting point. Good luck.
Tip: You will find a ready made reconciliation form on the back of your bank statement. You could use that instead. Having to keep turning the statement over can be irritating, so make a copy of the transaction side of the statement and keep that as your reference. Of course if you have financial planning software and use it accurately you should have agreement all the way!
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