This process may seem a bit tedious at first, but there’s really nothing to it. Turn over a new leaf and make this a habit. You’ll be glad you did.

Step One. Begin fresh by starting a new register, or record, entering the balance from your monthly statement. Regardless of any poor habits you may have had in the past, this will be the new tool that you use from now on to keep your checking account in order.

Step Two. Don’t incur fees by withdrawing more than you have in your account. This sounds obvious, and it is easier now than it used to be, thanks to new innovations in banking. If you’ve found it difficult to keep track of your checking account in the past, making use of new banking tools (such as online bill paying and account tracking, as well as the bank’s automated phone service) may make the difference for you.

Step Three. Make a habit of entering into your record all of your checking account transactions, including debit card purchases, ATM withdrawals and fees, and the checks you write. Don’t forget to track any automatic withdrawals that are made on your account; for example, you may have arranged to pay your utility bills by allowing the utility company to deduct the amount of the bill from your account each month. It is important to track those expenditures so that you don’t make costly overdrafting errors.

Step Four. Use a calculator to figure your balance after every five or 10 transactions. This is the efficient and accurate way to compute your balance. As long as you know you’ve got enough money in your account, there’s no reason to do it more often.

Step Five. Read your monthly statement and compare it to your own record, adding to your record items that appear on your statement but not on your record. When the monthly statement comes in the mail, it may be your habit to file it away, but it will be very helpful for you to get into the habit of reading it. If you have never taken the time to carefully review your statement, this may be a revelation to you. Notice any fees that are being charged by your bank, and make sure that you understand why you are being charged. This exercise may also help you to track your spending and develop an awareness of where your discretionary income is going.

Step Six. Know how to reconcile your own record with your monthly bank statement. You will make note of any debits and credits from your own record that don’t appear on your statement, and add or subtract them from your statement balance. This corrected statement balance should agree with the balance in your own record. If it does, you’re done. If it doesn’t, proceed to Step Seven.

Step Seven. Check your work on Step Six. If you get the same discrepancy a second time, and if the discrepancy is a small one, you may decide not to worry about it further. You may choose to just accept it and make the necessary “fudge” correction. Once you become more adept at reconciling your books, there will probably not be many surprises of this sort. However, if the discrepancy is large or troubling to you, you may choose to call your bank and ask for help in explaining the discrepancy.

Tags: Balancing account, bank statement, checking account, debits and credits