Keeping your checking account up to date is the secret to avoiding bank charges for overdrafts. If you are careful to keep all the receipts from any purchases you make from your account, whether it is an ATM transaction or an online purchase, and enter them promptly into whatever system you are using to keep track of your account, you will always know just how much money you really have into spend.
Many banks offer online banking which allows you to see your balance at any given by logging into a website for the bank. Keep in mind though that the online system may be a day or two behind and has no way of knowing about checks that you have written that have not cleared the bank yet. Because of this lag time, it is important that you balance your checkbook on a regular basis, making sure that your balance agrees with what the bank shows, allowing for any adjustments needed for uncleared checks or withdrawals, as well as any credits made to the account, such as interest postings.
The easiest way to balance your checkbook is to work from the statement sent by the bank or the current statement from the bank’s online system if one is available. An easy way to do this is to start with a fresh sheet of paper and start one column with the bank’s balance and a second column with your checkbook ‘s balance. Subtract from the bank’s balance column any checks that you have written that have not cleared yet and any other debit transactions that have not yet appeared on the bank statement. To this new total in the bank’s column, add any deposits or other credits that you have made that have not yet appeared on the bank’s side.
The process is similar for the column for your checkbook – add to your checkbook’s column any withdrawals that the bank shows that you have not entered into your checkbook (hopefully you’ve been keeping track and don’t have any to subtract any withdrawals). Now add in any credits that the bank shows that you don’t have yet, such as an interest posting or direct deposit. If the figures at the bottom of the two columns agree, you’re done and your account is in balance; if not, you still have some checking to do until you find the discrepancy. Check you math in your checkbook – it’s easy to make an error if you’re in a hurry.
The checkbook registers that fit in your checkbook usually have two lines available for each entry which allows you to update the balance in each entry as you make it, which will help you keep your checkbook up to date all the time and avoid those nasty overdraft charges. By using two lines for each entry, you also have room to note what each entry was for, which can be very useful when trying to budget your expenses.
Keeping your checkbook in balance does not have to be a chore, but if is much easier if you update it each time you use the account. Find a system that works for you and stick to it!