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How to Balance a Checkbook Congratulations! That checking account you just opened marks one of your first steps to financial independence and responsibility. It’s a sign to businesses everywhere that your promise to pay is good.You know your promise is good, so why all the fuss about balancing your checking account? One very good reason to balance your checking account every month is to save money. If you bounce one or more checks, it'll probably cost you over $45/check in service fees. Bouncing a check is a common phrase that describes what happens if you write a check for more money than you have in your account—it's "bounced" back to you to make it good.
Consider the consequences If Denny continues bouncing checks, it'll cost him a lot more than money. Financial institutions have the right to close mismanaged accounts, and report such actions to credit bureaus. So Denny could lose his checking account and hurt his credit rating, simultaneously. If he opens and mismanages another checking account at another financial institution, he'll have a tough time opening a third account. And, should Denny apply for a loan, this irresponsible behavior will likely result in a higher interest rate and could even affect the approval of his loan. Who makes mistakes? Checking account mistakes do occur. Usually, it's the account holder who errs, but on occasion credit unions also make mistakes. The only way to catch any errors is to keep good records and regularly balance your account. What do you do first? Talk to your parents Schools generally don't teach students about checking accounts or other financial matters. So, how can you learn to keep your records in order, and a balanced account? Your parents probably can help. Ask your mother, father, or guardian to take a look at your check register. If you've never written a check, ask them to watch you write that first check and record it in your register. Allow them to work with you for the first six months, and soon you'll be ready to do it all on your own. What if your parents don’t know or aren’t available? Educate yourself "Some parents don't know how important it is to keep good records of transactions. So, they may not know how to teach their kids,” says Steve Carr, vice president of business development for Boulder Valley Credit Union in Boulder, Colorado. They've made mistakes, but does that mean you have to? If your parents don't know how or don't have the time to show you how to keep good records, you have other options. Ask your credit union what they do to educate members who are using a checking account for the first time. Check your credit union lobby for pamphlets or information on checking accounts. Find out if your school offers an elective class in personal finance. And read on for tips on how manage your checkbook. You can do it Some credit unions, like Boulder Valley Credit Union, allow members as young as 14-years-old to open checking accounts. “No problem,” says Carr. However, he says that not keeping good records is one of the common mistakes teenagers make with their checking accounts. Here’s what you can do:
Copyright 2004 Credit Union National Association
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