This cannot be emphasized enough. Maintaining a bank register helps you keep track of every transaction—like deposits, withdrawals, and payments—in your bank account. When using a debit card or other payment system, it’s easy to forget to record payments. When this happens, you will think you have more money in your bank account than you do. This can lead to inconvenient and avoidable trouble. By writing these down, you’ll always know exactly how much money you have.
At the end of each month, you should reconcile your register. It doesn’t take long once you get familiar with the process. This means comparing your records to your bank statement to ensure everything matches. If you spot any differences, such as fees or missed transactions, correct them in your register. Reconciliation helps you avoid overdrafts, spot errors, and manage your money responsibly.
Reconciling your bank statement each month is a way to make sure your personal records match what the bank says about your account. Here’s how to do it:
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- Get Your Tools Ready: Grab your bank statement, your bank register (where you wrote down all your transactions), and a calculator if needed.
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- Match Transactions: Look at each transaction on your bank statement (deposits, withdrawals, checks, and payments). Go one by one, and mark off the same transactions in your bank register.
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- Spot Missing Transactions: If a transaction is in your register but not on the statement, don’t worry. It might just take time to show up, like a check you wrote that hasn’t been cashed yet.
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- Add Fees or Interest: The bank may have charged fees or added interest that aren’t in your register. Update your register with these.
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- Compare Balances: After checking all transactions, look at your bank register’s final balance and compare it to the ending balance on your bank statement. If they match, you’re good! If not, look for mistakes or missing transactions.
Here is a link to a helpful video that explains the actual reconciliation process. How to reconcile a bank statement. Doing this each month helps you avoid surprises, like overdrafts, and keeps your finances in check. It’s important to make this a monthly habit!