How To Keep a Running Balance of Your Account
One of the most basic and essential things that you should do is to keep a running balance of what you currently have in your checking account. This step is essential since it keeps you from overdrawing your account. You simply can not rely on the current available balance that the ATM machine gives you. Just because your debit card transaction is approved, it does not mean that you have enough money to cover it. The bank runs a system of holds, and sometimes the holds drop off before the transactions clear your account.
This is a fairly simple process, and if you do it as you go, then it really isn't time consuming.You can do it the old-fashioned way by hand, or you can use an app on your phone or computer to track your expenses. In either case, you should update your running balance each day.
User Your Account Ledger to Track Expenses
First, you need your account ledger from the bank. It is the little booklet that comes with each box of checks. On the left-hand side you will see a place to record the date, and the transaction name. If you are writing a check you should record the check number and the person you made the check out to. If you are recording a debit transaction, then you should write down the store at which you completed the transaction. If you are doing this on a computer software program you will click on the command new transaction and enter in the information.
Record Transactions as You Complete Them
Second, you will record the amount of the transaction on the right hand side of the ledger. Since you are completing a debit transaction (checks, debit cards or withdrawals) you will record the amount in the column next to your transaction description. You should remember to record any fees, as well. After you have written the amount from the transaction, you will need to subtract it from the running total 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 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 (birthday gift or paycheck) and 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 happen each month. You can simply sit down and record these transactions all at once at the beginning of the month. This will prevent you from overspending during the month, as well. When you schedule automatic transfers and withdrawals, you can schedule them around your payday to help you remember to add them to your register.
- You can easily do this as you go. If you feel rushed at a store you can finish the math or write down the transaction later during the same day.
- You can check online to make sure you have not missed any transactions. 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.
- If you do this on your computer, set aside five minutes each day to update your computer program with your transactions. This will help you to know how much you have in your checking account the next day.
- If you are using a computer program, you can schedule automatic withdrawals, bill payments, and direct deposits to be entered in automatically. This makes keeping track 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.
What You Need:
- A checkbook ledger or transaction record