Reconcile Bank Accounts

If you use a checkbook or some sort of financial software (like Quicken, MSN Money, etc.), you should have recorded all the transactions that happened throughout the course of the month:

• Any money withdrawn through an ATM.
• Any checks written.
• Any automatic or electronic bill payments, any scheduled transfers.
• Any time you swipe your debit card at the gas station, grocery store, etc.)
• Any bank charges.
• Any deposits, whether via ATM or electronic/direct deposits (i.e. payroll).
• Any interest accrued.

Once you receive your bank statement(s), you will use them to confirm all your account activity for that month.  This is reconciling your account.  Take your monthly bank statement and compare what you have recorded in your checkbook (or software) to what your statement shows has cleared your account. 

To reconcile, gather your monthly statement, a calculator and a piece of paper:

1. Match checks from bank statement with check register
2. Match deposits from bank statement with check register
3. Match withdrawals and other debits from bank statement with check register
4. Record any interest and/or bank fees
5. From check register, make a list of all checks, ATM withdrawals, debit card purchases and electronic withdrawals that did not appear on the statement and total those up
6. From check register, make a list of all deposits that did not appear on the statement and total
7. On the piece of paper, do the following formula:

                                 Ending bank statement balance

 PLUS (+)                   Outstanding deposits total

MINUS (-)                   Outstanding checks, withdrawals, debit card transactions total

EQUALS (=)                 Check register balance

If you’ve never kept record before, you can always start anew by using a “forced reconciliation.” If you’ve had a bank account for several years, it would be too time consuming to go back and manually enter each missed transaction that you did not track. Instead, use the ending balance as shown from your bank statement from two months ago as your starting point. This will be your starting balance in your check register. Enter all transactions that you have processed in last month's statement and reconcile your account as outlined above.  You will need keep up records from that point forward. When you receive your next statement, you will be able to reconcile your check register with your statement.