Balancing your checkbook is an excellent way to manage your finances and keep your spending in check. But this becomes much more challenging when you have multiple checkbooks. Each separate checking account requires a separate checkbook, and you must balance each one.
Lily Stephens, a freelance writer with five separate checking accounts for her various clients, struggled to keep her checkbooks balanced. She dreaded the first of the month because she had to sort through piles of receipts and computer print outs to determine her balance. But for business owners in particular, balancing your checkbook is essential to avoid losses and perhaps even bankruptcy. Recording a transaction in the wrong ledger could lead to many problems while forgetting to record one could cause even more.
Larger businesses often employ people to balance all of their checking accounts and make sure their finances are in order. You might not have that option. But don’t worry. By following these tips, you will be able to manage your finances through your checkbook as more effectively than ever.
Receipts are easily lost, torn, or distorted, so when you push them into your wallet, handbag, or drawer, you risk losing important information.
So don’t wait to organize your receipts. As soon as you make a purchase, regardless of whether it is online or off, label and categorize the receipt. Write the account it is going into on the top left corner in legible print. Then slip the receipt into a file for that account or the actual checkbook. If the receipt is electronic, save it in a specific file. If the receipt is emailed to you, then use your email labeling system to categorize it.
For visual folks, color coding makes organizing much easier. But even if you aren’t generally visual, try it anyway. Color coding allows you to see the accounts at a glance. Make the colors as different from one another as possible so that it is not complicated. In other words, don’t use salmon for one account and coral for another unless you have no other choice. Primary colors often work best because they are so distinct from one another. Keep a cheat sheet handy to remember which accounts are associated with which colors if necessary.
To further simplify the process, clearly label your accounts and their documents. Sometimes referring to the accounts by the bank name may be best. But if your bank accounts are with banks that have similar sounding names, it may be more convenient to label the accounts with their primary uses such as “Family Checking Account,” “Rowan’s Wedding Planner Account,” etc.
For a double dose of organization and financial managing, clearly label the account in the color which represents the account.
You can choose to do this part either in a paper ledger or in an electronic one. You will need a separate one for each account. Title the ledger with the account or its code name clearly. Input all of your transactions in this ledger.
For convenience sake, you can keep a running total at the top as well. You will need to update this each time you put in a new transaction, but this will allow you to maintain a clear idea of what the account contains.
One of the biggest challenges in managing finances with a checkbook comes when folks don’t use consistent abbreviations to notate certain transactions. Regardless of how you symbolize the transaction, its type, and other information, you must be consistent.
Keeping a cheat sheet for relevant abbreviations can be equally helpful, particularly if you have more than a handful of terms. So long as the cheat sheet does not include pertinent account access information, this sheet should not do you any harm. Keep it in your computer or with your checkbook register.
The more regularly you balance your accounts, the less intimidating the process becomes. It also allows you to catch errors, such as withdrawing funds from the wrong account. Not only that, but by balancing your checkbook regularly, you lessen the time you’ll spend wading through confusing account transactions.
Balancing your checkbook is an essential step to managing your finances. This responsibility is not lessened just because you have multiple accounts. On the contrary, it is increased. With multiple accounts, you and others who have access to the accounts have more opportunities to make mistakes. If you make it a habit to record the transaction and balance your accounts as soon as possible afterward, you will keep the work from adding up and have a better grasp on your current financial health.