Elise dreaded paying bills. By the time she was finished she was so grateful to have the job done that she didn’t want to tackle balancing her checkbook. After all, she reasoned, she knew how much money she had when she got her account balance from her ATM statements.

A lot of us are like Elise. The truth, though, is that balancing your checkbook is important for several reasons:

• It gives you a feeling of financial control
• It helps ensure that you don’t bounce checks and incur overdraft and bounced check fees
• It gives you an accurate picture of your accounts
• It can show you where you’re spending money

While it’s a good idea to balance your checkbook every week, if this is your first time with a checking account, or if you have never been consistent about keeping your checkbook balanced before, start with a goal of balancing it once a month. To balance your checkbook you’ll need:

• Your bank statement
• Your checkbook
• Calculator
• Pencil

Steps to balance your checkbook:

• Find the place in your checking account statement where your deposits are listed (it may be called check transactions or transaction details).
• Find and check off the deposits in your checkbook, or enter the deposits if they are not already recorded. Make a note next to the deposits in your checkbook that don’t appear on your bank statement – that will remind you to look for them on the next statement.
• Find the place on your bank statement where your withdrawals (checks written, ATM withdrawals, debit card uses) are listed.
• Find and check off the withdrawals in your checkbook, or enter the withdrawals if they are not already recorded. Make a note next to the withdrawals in your checkbook that don’t appear on your bank statement – that will remind you to look for them on the next statement.
• Find the place on your bank statement where fees, service charges or interest payments credited or, or debited from, your account by the bank are listed. Make sure that these entries are recorded in your checkbook.
• Find the current ending balance that your bank reports on your statement. Write the number down.
• Add all of your outstanding deposits (the ones you made a note next to in your checkbook). Now your deposits are current.
• Subtract any outstanding withdrawals from step 2. The resulting balance should equal the balance listed in your checkbook. If not, go back to steps 1-3 and make sure that you have accounted for all deposits and withdrawals.

One of the most common difficulties, and frustrations, in balancing a checkbook can be not having withdrawals listed, particularly ATM and debit card withdrawals. That can be doubly difficult if two people are accessing money from the same account. Try dedicating a space (an envelope, a file folder or a drawer) where you put your ATM statements, receipts, etc. Then make sure you enter them into your checkbook.

A second challenge is to notice where your financial behavior is costing you money and work to change that. For example, notice how much interest you are paying your bank for overdraft protection when you write checks thinking you have more money than you do (after you forgot to record those two ATM withdrawals…). Do you notice that you withdraw many small amounts of money from ATM machines, maybe because you keep spending the cash you have for unexpected, unplanned expenses? Are you paying service charges for ATM withdrawals rather than using an ATM affiliated with your bank that you can access for free? By examining your money habits you could easily find small changes to make that can add up to significant savings.

Balancing your checkbook on a regular basis is a great way to begin creating positive financial habits and to begin feeling confident about your money skills!