How to Balance Your Checkbook

Balanced a checkbook recently? We know, that question is kind of like asking if you’ve been walking up to your TV to change the channel manually — didn’t those practices go out in the early ’90s? But for real, the importance of balancing your checkbook (even if it’s a digital one) is just as significant now as it was back in the day.

If you want to avoid having payments declined due to insufficient funds in your checking account, it starts with knowing how to balance your checkbook. A checking account, also known as a share draft account at a credit union, is one of the most liquid accounts you can have, allowing you to access your money easily at any time. Balancing your checkbook monthly can help you understand how you spend your money and catch any errors or suspicious activity.

So, let’s take a crash course on how to balance a checkbook. Then, if you’re interested in opening an account or would just like some tips on the different types of accounts and checking features available, the friendly team at your local credit union would be happy to help!

How to Balance Your Checkbook

How to Balance Your Checkbook

Many of us use our checking account to pay for life’s expenses, including utility bills, rent or mortgage, food, and luxuries like a gym membership. There are a variety of approaches for keeping tabs on your funds to ensure you accurately account for all your income and expenses.

Physical checkbooks usually come with a check registry: A small booklet designed to help you keep your transactions organized by providing spaces to record your income and expenses so you can see at a glance where your revenue comes from, how you spend it, and your bottom-line balance.

Most check registers include these details:

Sure, monitoring how much money is going into and out of your account via paper checks and financial statements may be fading away in favor of online banking. However, the same basic principles apply to balancing your checkbook, whether on paper or online. 

What Does ‘Balancing Your Checkbook’ Mean?

Balancing your checkbook is a way to track your income and expenses to ensure your financial transactions are equal (or balanced) between your own records and those kept by your financial institution. 

Keep in mind that debit cards and digital wallets, such as Apple Pay, Venmo, Zelle, and PayPal, are often tied to your checking account. With so many ways to pay for goods and services — some potentially vulnerable to hacks and fraudster attacks — it’s more important than ever to know how to balance your checkbook and be aware of your balance and any apparent inconsistencies.

The Importance of Balancing Your Checkbook

Balancing your checkbook helps you avoid spending more money than you have in your account. And although many credit unions offer no-fee checking accounts, you may need to maintain a minimum balance to take advantage of that perk. Monitoring your balance will ensure you keep enough money in your account to avoid paying unnecessary fees. For example, fees for bouncing checks can range anywhere from $20 to $40 bucks.   

Balancing your checkbook also helps you manage automatic payments for bills and subscriptions. These often “out of sight, out of mind” arrangements might not get the same attention as your manual payments. But ready or not, the money to pay those bills will come out of your checking account as scheduled, and if your fund balance falls too low on the due date, those payments might not go through.

Your financial institution likely offers online banking. If you haven't already, be sure to sign up for it and use it to check your statements regularly, even if you're confident there are more than enough funds in your account to cover your expenses. By regularly monitoring your checking account, you are much more likely to discover financial errors or fraud in time to flag them and recoup any associated losses.

Paying close attention to your checking account and reviewing it regularly will also help you with budgeting and setting financial goals. When you can see exactly where your money is going, you can act to eliminate any expenses you don't need or want.

8 Steps to Balancing Your Checkbook

Balancing your checkbook doesn't have to be complicated or time-consuming. Simply follow these eight steps, and you will soon notice the benefits of more active financial management.


1. Gather your financial information 

Before you start balancing your checkbook, locate your financial statement for the month just ended and round up the records of your transactions — paper or emailed receipts for both online and in-person purchases. At the same time, gather records of your income for the month — paychecks, gifts, tips, or any other money deposited into your account.


2. Choose a method for balancing your checkbook

There are a variety of ways to balance your checkbook. You can go old school and use the register that came with your paper checks or turn to a simple ledger or spreadsheet. If you prefer a paperless method, phone apps like Empower or YNAB are convenient tools, especially if you link them to your checking account. Accounting software such as Quickbooks, Quicken, or Freshbooks are other options. 

Remember, a financial consultant at your local credit union will be happy to advise you on the method for balancing your checkbook that best suits your needs.


3. Record all transactions

To record all your transactions in your check register, include the check number (if applicable), the date, the payee, the amount you are paying, and the purpose of the transaction. 

Also, record any withdrawals or debit card payments you make from your checking account. Include special notes such as payment confirmation codes and the purpose of the expenditure using specific categories such as groceries, utilities, rent, dining out, etc.

Keep a running balance of deposits as well. This will ensure you haven’t forgotten a transaction when the time comes to do your monthly account reconciliation. 


4. Update your transaction tracking tool

Tracking your financial transactions on an app is a convenient way to both receive money and make payments, but don’t take that convenience for granted. Make sure you maintain them by downloading the latest versions and updates. Updating your transaction tracking tools will help ensure you won't lose any records, and the app will continue functioning correctly on your device. Regular software updates will also enhance security features and guard against cybercrime.  


5. Reconcile with financial statements at least once a month

One of the most important fundamentals of balancing your checkbook is reconciling with your statements each month. Here are the basic steps:


6. Address any discrepancies

The balances on your checking account register and your financial statement should always match, but occasionally, you may notice differences. When this happens, check your log to see if one of your withdrawals or deposits has not cleared, if your financial institution has a record of a transaction not recorded in your register, or if any transaction amounts don't match up. Also, check for potential math errors you might have made.

If you believe an error has occurred or suspect fraud, don't hesitate to contact your financial institution immediately.


7. Automate the process

Online tools can make balancing your checkbook a breeze. For example, many credit unions offer online calculators to help you add up your expenses and income and enable you to pinpoint discrepancies, saving you time and frustration.


8. Monitor your financial goals

Not only is a checking account a convenient way to hold and access your funds, but it is also an excellent step in creating a healthy financial future.

Smart money management practices — like balancing your checkbook — are key to setting and reaching financial goals. When you adopt the habit of monitoring your transactions, you will notice you may be inadvertently spending too much money on things you don’t need or have forgotten about, such as streaming entertainment channels, online publications, or monthly services and subscriptions.

Keeping track of your finances will enable you to avoid overdraft fees and maintain minimum balances. Over time, you may notice you are accumulating money in your checking account. This would be a good time to seek opportunities to keep excess funds in higher interest-bearing accounts. 

The financial experts at your local credit union can help you navigate the many available options.

Further Resources on How to Balance Your Checkbook

Here are some additional resources on how to balance your checkbook.

Credit Unions Offer Solutions to Help You Stay on Track

With a balanced checkbook, you have the power to relax, knowing you have enough money in your checking account to enjoy dinner with friends, make a long-awaited purchase, or even save money for a rainy day. 

Now that you’ve got the basics on balancing your checkbook, head to your local credit union for even more advice on how to make the most of your checking account. Use our handy Credit Union Locator Tool to find a branch near you.

Light Bulb for Did You Know YMF

Did You Know?

Balancing your checkbook is an important step in managing your money. Not-for-profit credit unions not only make your money go further with some of the best rates around, but they also provide exceptional member service, convenience, and lower fees than most for-profit national banks. 

Find the right Credit Union for you

There are more than 5000 credit unions to choose from across the U.S.