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With tax season looming, many families are committing to getting a handle on their finances. The first step to grabbing that handle is finding out where you are financially right now , and that means doing something the majority of people don't do—balancing your checkbook.
If you never have balanced your checkbook before, dealing with all those numbers can seem scary. It may help to remember that you deal with numbers every day: scoops of formula and ounces of water, price per diaper for different-size bags, and measuring out ingredients for a recipe. In fact, balancing your checkbook can be just like following a recipe. Knowing how much money you have available is the first step in making good choices about how much you spend. Try one of these suggestions to get yourself in balance, and cook up a financially healthier year.
Quick-Fix Recipe
When you get ready to make a recipe, the first thing to do is to check the list of ingredients against what you have on hand in order to figure out what is missing.
If you want a quick fix for your current checking account, begin writing down all checks, deposits, and other debits (debit card transactions and automatic deductions) right away. When the next bank statement arrives, whether by mail or electronically, a good financial cook will make time for a BAD SOB (not a result of a lower than expected cash balance!). Try this method to reconcile your checkbook balance to the statement as you look through your latest month's transactions:
B ank balance (use statement ending balance, not the beginning)
+ A dd D eposits in your check register that don't appear on the statement
- S ubtract O utstanding checks, those you've written that don't appear on the statement
= B alance (should equal your checkbook balance on the same closing date)
After completing this exercise you may indeed give a bad sob, but you'll be on your way to reaching a financial starting point. Since you only looked at the most recent transactions, you may not have a completely accurate checkbook balance. There are occasional “straggler” checks that can show up later. Reconcile your account for a couple of months before you make a permanent adjustment to your checkbook balance.
Cooking From Scratch
Stop writing checks for two weeks to a month. Pay for everything you can with cash. This should be enough time for all the checks you've written in the past to clear. Then call the bank, or check online, and find out your current balance. Use this number to start from scratch.
Making Substitutions
The surest way to have a balanced checkbook is to substitute a new account for your old one. Open another account, but make sure you leave enough money in the old checking account to cover checks that you've written (estimate how much). After a month, close out your original account and deposit any remaining money in the new account. The difficulty here is having sufficient balances in both accounts to avoid any extra service charges. Many moms don't have that kind of cash lying around!
Once you have an accurate, reliable balance, keep it up to date by following this recipe:
- Make sure you always record every transaction that affects your checking account.
- Use checks with carbon copies if you have trouble remembering to record them in your check register. However, this won't help you with other transactions.
- Every month, pull out your check register and verify the balance against your new bank statement. Checking account statements usually have a form on the back of the page to help reconcile these two balances.
- If the two numbers are not the same, check to see that you have deducted any service charges from your check register. You should also verify that the amount of your check equals the amount you wrote in your register, and is the same as the amount listed on the bank statement. Banks do make mistakes on occasion!
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 Cindy Sumner is an author and a former contributing editor for MOMSense magazine. Her book, Dollars & Sense, is a practical, easy-to-understand guide that will help moms discuss and handle finances more effectively. She has written several other books including – Planes, Trains, and Automobiles… for Kids; Time Out for Mom… Aaahh Moments; Mommy’s Locked in the Bathroom: Surviving Your Child’s Early Years with Your Sanity and Salvation Intact; Family Vacations Made Simple; and Mommy’s Trapped in the Minivan: Surviving Your Child’s Middle Years with Your Sanity and Salvation Intact. Cindy lives in Sheldon, Illinois, with her husband John and their three children.
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