Bank Statements
How do people keep track of their checking and savings account balance?
- Keeping accurate records
- Reconciling, or balancing, their accounts
It sounds easy to keep accurate records, yet most people don't do it. Many people use a check register to write down every transaction. However, in our increasingly digital age, most young people (and even adults) don't like to take the time to write everything down, especially since most transactions are via Debit Cards and can be accessed online or on their phones. Many people use spreadsheet or online budgeting software to track their accounts. Whichever method you choose, you need to be accurate. If you forget to record even one check, you could end up with Insufficient funds.
Each month, you bank will send you a statement via email or regular mail. Some banks will waive your account fee if you choose your statement to be emailed.
To reconcile or balance your account, all you have to do is match your records to that of the bank. Normally, most transactions will be in both places, however it's not uncommon for a check to be delayed.
An example of this is when you wrote a check to your friend to repay her $50.00 for buying your concert ticket, but she hasn't deposited your check yet because she is expecting a check from her parents and doesn't want to make separate trips to the bank. In this example the bank statement is $50.00 higher than reality. You know that $50.00 is coming out of your account, but the bank doesn't know about yet.
This is why you must keep accurate records of your account, and don't rely on what the bank says is your balance.
Below is an example from Lily's records.
- Notice that she started with a $200.00 balance.
- She spent $20.00 on ordering checks, which reduced her balance to $180.00
- Then she spent $23.11 at Fine Foods, which reduced her balance to $156.89
By now you've probably noticed how it works. Subtract payments from your balance to keep a running total. Then, add deposits to your balance.
Later, Lilly's statement came in. Do you see anything missing?
The check for Wayne's Book World hasn't cleared her account yet. If Lily just relied on the bank for an accurate balance, she would be $13.50 off.
