Tracking, Balancing, Reconciling

Why do you Track, Balance and Reconcile? To know for sure how much money you have in your checking account To verify that your records match the bank’s records (banks do make mistakes, but it’s more likely that you have made a mistake in adding or subtracting, or forgot to record something) To prevent bouncing checks and incurring fees of $25 or more per check If there’s a problem, you won’t have to wade through months of transactions to figure it out.

Tracking Write down in your check register (or where ever you choose to record it): Every check written Every debit card payment (or Apple Pay, or other digital pay system) Every ATM withdrawal Every ACH payment (automatic bill payments) Any bank fees Any Pay Pal or Etsy or other payments that came out of your checking account Subtract all of the above from the balance Every deposit you make Every automatic deposit (like paycheck) Any earned interest (on interest bearing accounts) Pay Pal or Etsy or other deposits add each of these to the balance Keep a running total of what is in your account. This is known as your “balance.”

But How Can You Keep Track? Below are 5 great methods of tracking your money: Get and keep all receipts from any money transaction you do. Periodically, every day or at least once a week, record them in your check register Envelope system—use an envelope for each category of expense. Either purchase debit cards and use them for that expense, or just record the expense on the corresponding envelope (don’t put real money in the envelopes—its too easily lost or stolen that way—you could use a debit card, however, just for that expense) Calendar or notebook—write each expenditure or deposit on the day it is paid on the calendar, or in the notebook with date noted Checkbook method—use the register in your checkbook every time you write a check, or make a withdrawal using a debit card (or other electronic or automatic withdrawal) or make a deposit (or automatic deposits) Computer system or phone app—record every transaction, on your computer program or phone app

Sample of a Check Register with running balance Its best to record transactions as they are made, but if you need to wait until the end of the day to balance, that’s okay too. Don’t wait too long; you will forget to record a transaction.

Reconcile Your bank sends a statement each month either by mail on paper or by e-mail. Open it! Print it off if it’s sent by e-mail. Get your check register, a calculator and a pen. Get out (or print off ) the worksheet the bank sends with instructions on how to reconcile. Now we will see if your records and the bank’s records agree. Read through the instructions on the worksheet. We will list those instructions on the next few slides.

Sample of a Bank Statement and worksheet

Steps to Reconciling your checking account using the reconciliation page that comes with your bank statement A—First compare the checks and deposits on the bank statement and your check register. Check off the cleared checks and deposits on the bank statement and in your register. B—When a check or deposit is listed on a bank statement that you receive, we say the check or deposit has “cleared” the bank. In other words, the bank recognizes that transaction in the account. C—Then record and subtract any withdrawals and record and add any deposits that the bank shows but you don’t have in your register.

Reconciling, continued D—record any interest earned (add) and any bank fees (subtract) in your check register. Check them off in your register. This is your “adjusted checkbook balance.” E—On the worksheet provided by the bank, list all un-cleared (or “outstanding”) checks in the proper column. (these are the ones in your check register without a check mark next to them) Add these together. This is your outstanding check balance. F--Now look for un-cleared deposits you have in your check register that don’t appear on your bank statement. These are outstanding deposits.

Check off cleared checks x x x x

Check register with checks “checked off” and the bank statement and the un-cleared checks listed and totaled on the worksheet Why don’t the balances match? You forgot to record the check to the Sinclair Station. After you subtract it, the balances will match!

Check register with checks “checked off” and the bank statement and the uncleared checks listed and totaled on the worksheet x -----------Correct to here---------------------------------------------- Now the balances DO match! You are balanced!

Even easier—3 steps And add deposits or withdrawals not recorded yet. Sinclair station 35.98 x 378.52

Adjust the bank’s balance 678.52 678.52 1/25 daycare 300.00 Now, you are balanced! 300.00 378.52

What if the balances don’t match? —If the balances don’t match, you may have made a mistake. Subtract your balance from the final balance shown on the worksheet. Look for a transaction in that same amount Check your math You may have recorded a check or deposit incorrectly, When your adjusted statement balance matches your adjusted checkbook balance, you are done!

Still Don’t Match? If you have rarely or never reconciled your checking account, you may just have to trust that the bank’s numbers are correct and use that adjusted statement balance as your new balance.

Some more helpful hints. Buy duplicate checks Keep your receipts! Take the time to reconcile your account each month.

Questions?