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4 Steps for Balancing a Checkbook

By Krystal Etienne · April 22, 2021 · 5 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

4 Steps for Balancing a Checkbook

With fewer people writing checks and mobile banking becoming the norm, you might think that balancing your checkbook is a skill that has lost its usefulness.

But the process of balancing your checkbook is still a necessary part of maintaining your checking account–even if you don’t carry around a checkbook and rarely, if ever, write a paper check.

That’s because it’s still important to keep a close eye on what’s coming in and going out of your checking account. This allows you to track your spending, avoid bouncing checks, and also catch errors or suspicious activity on your account right away.

Fortunately, balancing, also known as reconciling, your checking account is an easy skill to master.

And, once you get into the habit, it may only take you a few minutes once a week or so to keep tabs on your money.

What Does Balancing a Checkbook Mean?

The task of balancing a checkbook actually doesn’t have anything to do with the checkbook, although your checkbook register is still a great tool for doing the job.

Rather, balancing a checkbook refers to the process of reconciling and cross-checking the many transactions that occur in your checking account.

This means recording all of your deposits and withdrawals on a daily or weekly basis, adding and subtracting them as you go, and then regularly comparing your numbers to the bank’s to make sure they agree.

Why should I Balance my Checkbook?

Balancing your checkbook comes with a number of key benefits. These Include:

Knowing Your Balance in Real Time

When you log every transaction, and then add it to your balance if it’s a deposit or subtract it from your balance after paying a bill, you are able to know the true balance of your account–which may not yet be reflected online or in your app.

That’s because when you write a check against your account, the bank won’t deduct those funds from your account until the person you gave the check to deposits it.

Your bank app may show you have $2,000 in your account but if you wrote a $1,000 check yesterday, you actually only have $1,000 available to spend.

Tracking Your Spending and Sticking with Your Budget

During the balancing process, you look at every transaction in your checking account for a period of time, whether it’s a day, a week, or a month.

You might find that you’re spending more than you thought, or taking out more cash from the ATM each month than your current budget allows.

Balancing your checkbook on a regular basis can help you monitor your spending, and help to ensure you’re able to maintain your savings goals.

Reviewing Your Account for Errors, Fraud, or Billing Changes

Regular reviewing and tracking of your account’s expenditures can help you immediately spot any purchases or transfers of money that you don’t recognize.

You may also pick up on fees your bank is charging that you weren’t aware of, or that are new.

Or, you might notice that one of your auto-pay bills has gone up in price. If your payments are processed automatically without your review, those increases could go unnoticed, and unaddressed, for months, disrupting your cash flow and possibly causing other financial issues down the line.

How to Reconcile Your Checkbook

In the past, balancing your checkbook was often done after receiving your monthly paper statement from the bank.

You could then use the statement to compare the transactions you had listed by hand in their checkbook register with those shown in your bank statement.

The process of balancing your checkbook may be a little different today but the basic tenets are the same.

Here’s an easy step-by-step.

1. Recording Your Current Balance

You can quickly find your checking account balance by going on your bank’s website or using its mobile app.

If you’re using a paper checkbook register, you can then record this number in the top spot above the spaces you use to log your transactions.

If you don’t have a register or prefer to go digital, you can create your own register on your computer, or use an open source spreadsheet platform, such as Google Sheets. An online spreadsheet has the advantage of being accessible anytime from any device.

2. Recording any Pending Transactions

These are transactions that you know are coming, but have not yet cleared.

For example, when you deposit a check, your bank might release only part of the funds immediately, placing a hold on the rest of the money until the check clears.

Similarly, when you pay for something with your debit card or a check, the transaction may take a day or two to go through.

You can write down the date of the transaction and a brief description and, if it’s a check, the check number.

Starting with the first transaction you enter, subtract the amount from your available balance, or, in the case of a deposit, add it to the balance.

Then record the new amount on the next line of your register. You can continue doing this until all transactions are reconciled.

The final number is your current available balance–the actual amount you have in the account to spend.

3. Continuing to Record Transactions

As you continue to make transactions, you can then record them in your register or spreadsheet so you have a running tally of your debits, credits, and current balance.

You can do this as you go, or you can collect your receipts and record them in your checking register or spreadsheet at the end of the day or week.

Recommended: Differences Between Current Balance and Available Balance

4. Comparing Your Numbers

Once or twice a month, it’s a good idea to log on to your account and compare your bank’s total withdrawals and deposits and balances with your own records. If they match, you’re in good shape–you have a balanced checkbook.

If the numbers don’t align, you may then want to go back through your records, as well as the bank’s transaction history, to see where the discrepancy lies.

You may find that you forgot to record a transaction or you wrote down a number incorrectly, or made a simple math error.

Or, you might pick up an error on the bank’s part, a change in the amount a vendor is billing you, or a potentially fraudulent charge.

Generally, the quicker you pick up and address any discrepancies the better, particularly in the case of fraud or identity theft.

The Takeaway

Even in an increasingly paperless world, it can still be important to balance your checkbook.

Regularly balancing your checking account can give you a clear sense of not only how much money is in your bank account, but where your money goes.

This can help you track your spending, avoid bouncing checks, detect billing changes, and also spot errors or even fraudulent charges as soon as they happen.

Looking for Something Different?

If you’re looking for an easy way to keep tabs on your money, you may want to sign up for a new bank account with SoFi.

With SoFi Checking and Savings, you can get all the numbers you need to track your finances at a glance and on the go using the SoFi app.

See how easy it is to manage your finances with SoFi Checking and Savings today.

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