Last Updated on July 22, 2022 by admin
How would you reconcile your bank account to avoid spending more than you have? A question like this may concern many people.
Why? Because keeping accurate records of your bank transactions can help you determine your current state of monetary affairs and avoid unnecessary spending.
Although everyone knows the importance of doing bank reconciliation, the majority have no idea how to achieve it. Read on to know five essential steps to reach your goal.
Reconciling your bank account is a process you do when comparing your receipts and spending records to a corresponding bank statement to figure out the discrepancies and correct them.
This objective is to ensure your accounts will comply with those you receive from your financial organizations. Besides, it can help you improve your financial health by pointing out the waste. Therefore, it will be beneficial if you do it every month.
Follow the below steps to do bank reconciliation.
There are a host of ways to reconcile a bank account. Several people still follow the traditional method by using a notebook, keeping all the selling and buying bills, then balancing these financial transactions manually at the end of each month.
Others are more modern. They take advantage of the technology by using accounting software or mobile apps to track their money. No matter what technique you use, you have to ensure to keep a detailed document and reflect the proper status of your finance.
The first thing you have to do is to verify all of your current deposits. After that, examine whether these in your account are listed properly in the statement you receive from the bank or not. Compare two sets of documents to make sure see everything matches.
If anything is missing, try to find the reasons by looking at the notification history or contacting the bank for support. Once it is solved, you must adjust your records to reflect the exact numbers.
To avoid squandering money on unimportant stuff, you have your scheme about how much you will use and save in advance.
Hence, you can know exactly what you consumed by comparing your actual expenditure in your record and that from the financial institution. If it is redundant, you should avoid spending money on it again.
If there are any differences, the history function from the bank statement is always convenient as it can help you remember the small amount that is sometimes ignored, like parking fees or tips at restaurants.
Like the deposits, take your time to compare the withdrawals in your own record to the bank statement. Comparing them in detail to make sure nothing is missing.
There could be some differences between your record and that of the bank. You have to identify whether it is because you spend money on something but forget to register it on your account or not.
If so, you should immediately add the lacking figures you get from the bank statement and deduct the amount from your ending balance.
In the opposite case, it might be because the money in your account has not been cashed or is not cashed by the statement’s deadline, and you should call the person in charge of that bank to know the exact reason.
Bank adjustments, like a monthly maintenance fee or an account of interest you receive from the financial institution, might not be in your accounting records. Adding them to balance yours. If you have neither of them, contact your bank to tackle the problem.
Being excellent at controlling financial status and using money more effectively are ambitions of anyone. Reconciling your bank account can make it possible.
By following the five aforementioned steps, you will come closer to the expertise in managing your financial status and setting aside your pocket for more meaningful work.
Now, you already have the answer to the question at the beginning of the article: How would you reconcile your bank account to avoid spending more than you have?