How to Reconcile Your Bank Account

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reconcile accountOne of the most important things you can do for your financial situation is to make sure that you reconcile your bank accounts every month. Even if you check your accounts regularly, it is still a good idea to take stock of your finances each month, and reconcile your bank accounts to ensure that the “official” record the bank has matches with your records.

If you have some sort of personal finance software, this is usually fairly simple. You can easily enter the applicable dates, and the software will pull up all of the transactions that you entered within those dates. You can go down the list and check them off. If you keep track of things using pen and paper, you can look for the transactions since your last reconciliation, and start there, comparing your records with bank records.

Should You Keep Your Receipts?

I like to keep my receipts until the reconcile is complete each month. That way, if there is discrepancy, I have the receipt to refer to. This is one of the reasons that I get a receipt with all of my debit transactions. I keep my receipts in a file for the month, and, when the reconciliation is over, I put them in the recycle bin. I just pile them up, so they are usually in order, since I enter my transactions at least twice a week. While it may not be necessary to keep your receipts, it gives me peace of mind, knowing that I have some evidence, just in case I need to resolve an issue.

Other Reasons Reconciling Your Account is Important

Not only will reconciling your account help you make sure that everything lines up as it should, but it also provides you with the chance to really look over where your money has been going. This is important for two main reasons:

  1. Identifying fraudulent transactions: An in-depth look at your account statement may provide you with the ability to identify fraudulent transactions that you may not notice with a cursory glance spot check of your accounts online. You can also catch when a store adds a few cents to your bill, as some of the more unscrupulous sometimes do in an attempt to get a little extra money in a way that is virtually undetectable.
  2. Facing up to your spending: While reconciling your bank account can be great for helping you identify irregularities and inconsistencies in your transactions, it can also be a good way to help you face up to your spending. When you have to go through and acknowledge every single item, it forces you to see exactly where you are spending your money, and where you can make appropriate changes. It’s really an exercise in being honest with yourself.

Bottom Line

The account statement you receive from your financial institution, whether it’s for a checking account, savings account or credit card account, is the “official” record of what is happening with your account. It’s important to make sure that it matches what you think is happening with your money. Plus, reconciling your account can help you catch identity fraud, as well as provide you the chance to review your own habits.

(Photo: Philippe Put)

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7 Responses to “How to Reconcile Your Bank Account”

  1. While I agree that it is useful to reconcile your bank accounts in order to keep track of where your money is going, I’m curious how frequently you have found discrepancies?

    • govenar says:

      I don’t think I’ve ever seen a discrepancy with my bank account, but I have found a few with my credit cards (it’d probably be more likely to happen with a bank account for people who use debit cards); e.g., a restaurant adding the wrong tip (I think accidentally; they entered the total amount as the tip), and a couple fraudulent charges (I think from a website getting hacked).

      • govenar says:

        And in the restaurant wrong tip case, it was good that I still had the receipt, so that I could take it to the restaurant and show them. (Though I probably also could’ve disputed it with the credit card company, but that’s more of a hassle.)
        I do tend to keep receipts way too long though. I’ve got some from a couple years ago I should probably throw away. (But for large purchases where I might want to get something done under warranty, I’d probably still want to keep the receipts.)

  2. cvargo says:

    I enter amounts into an excel sheet and cross reference with and my bank account. Discrepancies are rare but i have had a restaurant enter a different tip amount than what i put on the receipt. Haniging on to my receipt helped me in the dispute process with my credit union.

  3. Strebkr says:

    I would like to recommend quicken. It pulls down your info. You can review and reconcile on the fly. I keep receipts in a hanging file for the year and can always use quicken to find the date of something then go to the folder to look for it. 2 – 3 mins twice a week is all I spend and I can tell you to the penny what was spent where.

  4. skylog says:

    i use financial software to track all spending, then see if it matches online.

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