MANAGING YOUR CHECKING ACCOUNT

Perhaps you know how to manage your checking account. If you do, that’s great; you don’t have to read this. You may be surprised, however, to learn that many very intelligent people do not know how to manage their checking accounts. If you are one of these people, or know one, you may go from day to day never being quite sure of your account balance. You may have trouble remembering to whom you wrote certain checks. You may attempt account reconciliation at the month’s end but never quite get your final figure to match the one on the statement. If you are one of these people, or know one well, this newsletter may be helpful to you.

With "bounced" check fees constantly rising, a mismanaged checking account can be expensive. The anxiety of not knowing the amount of your balance can add stress to your life. Reconciling your checking account against your statement each month can be easy. Just follow these steps.

First, it is vital to record every account transaction in your check register at the time that it occurs. If you wait until later, there is a good chance that you will forget the specifics of the transaction. If you know you are the type of person who will not do this reliably, I strongly recommend spending a few extra dollars to purchase the type of checks that have attached carbons. These are available at any bank or credit union and are wonderful for those of us who tend to rush or forget details. A box of these checks will pay for itself with your first saved returned check fee. Similarly, when withdrawing or depositing at an ATM or using a debit card at a store, write the transaction in your check register before leaving. If you think you will not do this, slip the receipt into your checkbook and do not take it out until you have recorded the transaction. When recording ATM withdrawals, be sure to include any fees charged such as those for using an ATM of another bank. ATMs must disclose any such fees. If your own bank charges an additional fee, record that at the same time. For non-ATM deposits and withdrawals, the same method works—hold onto the receipt in your checkbook until you have entered it in the register.

To reconcile your statement, take it, with your check register, a calculator or adding machine if you have one, and a pencil and paper, to a calm, quiet place. First be sure you have recorded all transactions up to that day. Then, look on your statement for any additional fees or credits, such as monthly charges or interest, and enter these in your check register. Do the necessary math in your register so that you have a final figure, which should be your current balance. Now you are ready to begin. Your statement is likely to have some type of grid on the back for this purpose. It is useful, but if you do not like it, you do not have to use it. The "ending balance" on your statement is your starting point. Write that number in the grid in the space provided, or on your paper. Next, add up any deposits you have made since that statement’s date which do not appear on the statement and add that to the ending balance figure. Next, carefully compare your statement to your check register, looking for checks you have written that may still be outstanding (not yet paid by the bank at the time of the statement), or any ATM withdrawals, fees, etc. which occurred after the date of the statement. As you did with the deposits, add these together. Then subtract this number from the last total. If you have done this correctly, your total should match the last figure in your register; and this figure should be your current checking account balance.

What if they don’t match? You may have made a math error, left something out, or put something in twice. Check the above steps a second time, carefully, and do the math again. If they still do not add up, it is possible that a check which you have long forgotten has been cashed. However, if you have checked everything that you can, and find no errors, it is reasonable to either call or go to your bank with your question. Banks are used to dealing with customer questions about statements, balances, fees, and so forth, and will be able to help you.

If you have questions about managing your personal finances, or need assistance with any of life’s many stresses, feel free to call your EAP. We’d be happy to help.

Sincerely,

Elizabeth Morrison, LICSW (Director, Pioneer Valley EAP)