How to Balance Your Chequing Account

Online banking has changed how we track our chequing accounts. With the ability to look at your chequing account detail whenever you want, balancing your chequing account can seem like an unnecessary item on your to-do list. Not so! By depending solely on the balance that appears on your on-line statement or your monthly mailed statement means you are setting yourself up for extra fees, bounced cheques and having errors go unnoticed.

Before you can reconcile your account with your statement, you must keep your own records. This can be done using a chequebook/transaction register, duplicate cheques or your own software or spreadsheet. Whatever the method, keeping track of money coming in and out of your account is necessary.

First Things First – The Lingo
Any money coming out of your account is called a debit. This includes ATM withdrawals, cash withdrawals, cheques and bill payments. Any money going into your account is called a credit, whether you deposit it in a branch, through an ATM machine or have it deposited electronically. Reconciling your statement and your account is simply accounting for all the debits and credits.

The Steps:
Step 1 – Gather Your Records
Get your account statement, your own records, paper, pencil and a calculator.

Step 2 - Compare Your Bank Statement to Your Records
On one side of your paper, write the date and ending balance on your account statement. Let’s say it is March 31, 2009 and your ending balance is $1,230.47. Now take your account statement, go through your records and check off all the items in your records that appear on your account statement. If there are any items on your account statement you forgot to put in your records, put them in now and adjust your record balance.

Step 3 – Reconcile Bank Statement
Take any items that appear in your records, but not on your statement (i.e., are not checked off) and list them on your sheet under your ending statement balance. Typically, these will be cheques that did not clear by the statement date, withdrawals, bill payments or additional deposits. Remember to subtract the debits and add the credits. Total the column. Compare this amount to the final amount in your records. If they are the same – congratulations you have balanced your account. If they are different, then you will have to work through the difference. First, verify your calculations in Step 2 and 3 and then check your statement and records. Keep verifying until your two amounts balance.

If you need some help or get stuck, don’t worry – come in, drop us a line or give us a call – we’ll show you how to balance your chequing account (even if it isn’t ours).