How To Keep a Running Balance of Your Account

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One of the most basic and essential financial skills you should master is how to keep a running balance of your checking account. This is essential since it keeps you from overdrawing your account.

You may think you can rely on the current available balance that the ATM machine gives you, this is not always an accurate representation of how much money you actually have. Worth noting: Just because your debit card transaction is approved, it does not mean that you have enough money to cover it.

While keeping a running tab on your checking account may seem like a lot of work, it's a fairly simple process. Plus, if you do it as you go, then it really isn't that time-consuming. Do it the old-fashioned way – with a paper and pen – or use an app on your phone or Excel sheet on your computer to track your spending and keep a running balance.

Whichever method you choose, you should update your running balance each day. Read on for tips on how to successfully keep a running balance of your checking account.

User Your Account Ledger to Track Expenses

First, you need an account ledger from the bank. An account ledger is a little booklet that comes with each box of checks.

On the left-hand side of the ledger, you will see a place to record the date and transaction name. If you are writing a check you should record the check number and the check recipient.

If you are recording a debit transaction, then you should write down the store at which you completed the transaction, as well as the amount and date. Be sure to enter as much detail as possible, and record the expenses as you make them. If you wait too long, you may forget to add them or not remember important details like the exact amount or check number.

Record Transactions as You Complete Them

On that note, you should make it a priority to record transactions as you make them. You will record debit amounts on the right-hand side of the check ledger, along with the date and amount. Since you are recording a debit transaction (these are checks, debit cards or withdrawals), you will record the amount in the column next to your transaction description.

It's also wise to record any fees, as well. After you have written the amount from the transaction, you need to subtract that amount from the running total (which is the total you have in your checking account) on the far right-hand side of the book. You may want to carry a calculator or sit down and check your math once a week. If you are using a computer program or iPhone app, then it will do the math for you.

Label Transactions by Type and Budget Category

If you are recording a deposit, you should write down the transaction description (such as birthday gift or paycheck), then record the amount in the column labeled deposit amount. Then you will add the total into your current running balance.

If you are doing this with a personal finance app or computer program, the computer can do the math for you. You can also set up recurring or automatic deposits to be automatically entered into the register.

Enter Your Automatic Payments In Your Ledge

If you are doing the running ledger by hand, you need to make sure that you do not forget any automatic payments or transfers that you've set up. To make this easier, simply sit down and record these transactions all at once at the beginning of the month. This will prevent you from overspending or potentially overdrafting your account over the course of the month.

Another tip? When you schedule automatic transfers and withdrawals, you can schedule them around your payday to help you remember to add them to your register.

Tips:

  1. It's easiest to keep a running tab of your checking account as you spend. If you feel rushed at the store, you can finish the math or write down the transaction later during the same day or even once you get into your car.
  2. Cross-check your recording transactions with those listing online on your bank's online portal. It is a good idea to do this once or twice a week. This is especially important if you are married or have a joint checking account. This also makes it easy to spot an unauthorized transaction or to spot when a deposit has been made to the wrong account.
  1. If you choose to keep your running tab on your computer, set aside five minutes each day to update your computer program with your transactions. This will help you determine the most accurate amount you have in your checking account the next day.
  2. If you are using a computer program, you can schedule automatic withdrawals, bill payments, and direct deposits to be recording automatically. This makes keeping track of your balance much easier. It may help your budget if you have your automatic withdrawals and payments come out as soon as you are paid, this way you won't spend the money and then still have bills to pay.

    Updated by Rachel Morgan Cautero.