Of course, the first paycheck you receive from your part-time job or a newly issued debit card from the bank sent to your email. Your smartphone application shows a certain amount of money on it, you use some of it, then just stop paying any attention to it. I did the same thing during the entire year after graduation from high school, which got me into quite an awkward situation having to justify “lost” money to my mom. The issue is, however, that a bank statement and a personal account can be two different things, but reconciling the statement will allow you to change that.
The first step you need to take is to collect all required information. You will need to download your bank statement in PDF format, as most banks will publish it online within the first days of the current month. Besides, prepare your own checkbook register, which can be done with a note in your phone with recorded transactions. Your goal is to act like a detective and find each transaction that appears in your bank statement. Usually, it is easier to begin with those that are easier to identify. For instance, a transaction of $7.99 spent on Spotify Premium or $45 that was transferred to your friend via Zelle to purchase concert tickets. Matching them with your own entries is quite satisfying.
Now it is time for the trick. Let’s say you have set an automatic payment for Netflix last month. It will be reflected in your bank statement. Let’s also say that you have made a deposit through your banking app, but didn’t log it in your personal account. Pending transaction is often the reason why there is a difference between your records and the bank statement. It causes the majority of misunderstandings, which means there is no need to worry if your records and the statement are a little bit off in terms of the amounts of money. Now you need to find those transactions that were registered by the bank but were not registered by you and vice versa for cash withdrawals.
After matching all transactions, you will have several items that need adjustment. It can be an automatic service charge or interest payment. No matter what it is, you need to add or subtract these numbers to make sure that your records show the exact amount of money your bank statement reflects. If your numbers don’t match, make sure there is no error in arithmetic – it happens way more often than you might expect. You will need to perform this procedure for around fifteen minutes on average once you know how to reconcile your bank statement.
Now set a reminder for the third day of each month with a title “Financial Detective Time”. This is not only entertaining but also an easy task that helps you form healthy financial relationships. Remember, you are not reconciling statements but developing a habit of being in charge of your finances. In case you get stuck somewhere, feel free to contact the bank’s customer support.