Hello, everyone! Today we’re starting a new series! This series is designed to help readers obtain knowledge and information about older technology or practices. So what are we learning today? Obviously, if you couldn’t tell by the title, we’ll be looking at how to write and balance a checkbook
A checkbook!? What in the world is that? Good question, here’s an answer: A book of blank checks with a register to register for recording checks written (Google). So, now the question is what are checks? “A check is a written, dated and signed instrument that contains an unconditional order from the drawer that directs a bank to pay a definite sum of money to a payee.” (Check. Investopedia.com). What does all of that mean? It means that if you have a bank checking account and presumably any money in it, you can transfer any amount from that account to anyone or any organization by filling out a “templated” piece of paper.
Here’s something you may not have known: You can write a “negotiable instrument” (bank-speak for any valid check) on just about anything! According to the Uniform Commercial Code, the body of law that governs such things, all you really need to include on your “check” are: Name of the payee, the dollar amount, the name of your bank, your signature, the date, and some suitable words of conveyance, such as “pay to the order of.” You don’t even need the account number or the bank ID number you find on pre-printed checks.
Here’s a picture of what a check looks like!
Just in case you don’t want to write your checks on a pizza box and haven’t seen the most usual form of pre-printed checks, take a look!
Let’s take a look at what this pre-printed consists of.
- Your name shows up on the top left corner. This check includes a name and business address (home address would be included if it is a personal check).
- The dollar amount can be seen on the right side of the check in the middle. You’d write this in numbers according to your currency to the exact value (this is known as courtesy amount). There is also a line provided in the middle of the check that allows you to write the dollar amount in word format (this is known as the legal amount). If there is any discrepancy in amounts, the legal amount will take precedence.
- Typically on pre-printed checks, the name of your banking institution shows up somewhere on the check. It’s located under the payee information for this check.
- On the bottom right you’ll sign the check with your signature. Typically signatures should be written in cursive. As cool as Ron Swanson is from the show Parks and Recs, please don’t print signatures… that’s weird.
- Please include the date that you’re writing and delivering your check. On the pre-printed check, the date can be seen on the top right. You may write the date in any valid date format.
- The words of conveyance shows up below your name and address information. It basically is a clause that states that the grantor (payer –you) intends to convey (transfer property or title –or monies in this case) to the intended recipient (payee). This field is where you’ll write who you intend your bank to pay or transfer money to. “Pay to the order of,” would be an example of words of conveyance written on this check.
- Included on the bottom of the pre-printed checks are your bank checking account and routing numbers (more about these below).
If you go step-by-step through the above list you will be able to draft a nice check to hand over to stores, utility companies, title companies, charity organizations, and really anyone willing to accept checks.
Note: Paying with a check is probably the least secure form of payment. It gives out way too much information and especially pre-printed checks where your routing and bank account numbers are written down and can be seen by everyone handling the checks.
Your routing number is a number that financial institutions use to route (or transfer) monies from one another. For example, your Bank of America routing number will be the same as several thousands of other Bank of America customers based on how the bank happens to be setup. As for bank account number? Yep. That’s your actual bank check account number being listed there.
Balance Your Checkbooks
Now that we know what a check is and how to actually write one — I hope — let’s take a look at balancing it. So the act of balancing a checkbook means you’ve recorded all additions (deposits) and subtractions (withdrawals) made to your bank checking account. Each deposit or withdrawal is called a transaction. The purpose of balancing your checkbook is to assist with tracking how much actual money you have in your checking account at any given time. Balancing financial information is important and the practice shouldn’t be restricted to bank checking accounts but should be used for all money accounts involving deposits and withdrawals.
Follow These Steps To Balance Your Checkbook!
- Locate your register — it usually comes with your checkbook. Remember, it is a little booklet where you write down all your checking transactions.
- If you cannot find it or prefer to use something else there are plenty of other options available either electronically via phone apps or professional bookkeeping notebooks online.
- Your tracker medium should contain space for the check number; the date you made the transaction; a description of the transaction such as what the check was written for, whether it was a check or debit transaction; the amount of the check (withdrawals); a deposit column for all monies going into your account; and lastly the balance or the actual money in your account.
- Once you have this information. You start with the opening balance or the amount that is currently in your account.
- For all of your future transactions, you’ll take your deposits and withdrawals and translate them onto your register. For example: Write down a withdrawal amount you made on whatever date then “balance” it by subtracting that amount from your opening (current) balance. You now have an ending balance. Do the same for deposits, but instead of subtracting the amount from your original, you would add it thus giving you a higher ending balance.
Five Steps To A Balanced Account (from Capitol One):
Whether you track your deposits and withdrawals in your checkbook register, or online, follow the same five steps to balance your account every month:
- Enter all transactions into your checkbook register each day. This includes ATM withdrawals, online bill payments, and debit card purchases.
- Review your account statement as soon as it arrives. Compare the monthly statement to your checkbook register, and place a check mark next to all of the items that match.
- Adjust your checkbook register if necessary. Add or subtract items on your register that appear on your statement but were overlooked when filling in your register.
- If you find errors, double-check everything. It’s easy to make a mistake such as transposing numbers, so it’s a good idea to double-check every entry first. Then, if there are still errors, contact your bank.
- Finish. When your statement’s ending balance matches the ending balance for that month on your check register, your account has been reconciled. Congratulations!
If you follow the above steps and advice you will be proficient at maintaining a balanced checkbook (checking account). Important things to take note: When your statement comes in from your banking institution make sure you compare it to your register, fixing any mistakes you may find. Who knows? Though it is not often, banks make mistakes too, and if you catch it you can potentially save yourself a lot of money (and headache).
I hope this helps! Now go write checks and balance them like an old school master!
For more random financial advice check out my post on improving your credit score and using credit cards!
“Money won’t create success, the freedom to make it will.”
— Nelson Mandela