Bank balance does not balance

[Radiance]

For some reason I have been unable to know EXACTLY how much I have in the bank. I am not sure it is that important, but it bothers me.

I get paid the same amount 15th and month end. At that point I allocate ALL the money to a virtual envelops, including saving or paying off debt.

However, everytime I get paid, I have something between $100 and $300 in the bank. I never know exactly how much or why. What am I doing wrong and how do I fix it?

[disneysteve]

Do you balance your checkbook each month? You need to balance/reconcile the account to make sure everything is correct. You could have made a mistake. The bank could have made a mistake. If you don't balance the account regularly, you'll never know.

And yes, it is very important.

[cicy33]

There two ways to do it.

1. Do not use your account at all for 30 days. If you must for one reason or another, only put in enough to cover the check or bill. Otherwise use strictly cash, this is hard but can be done. I have done it before and I really need to do it again. I say 30 days because it seems there is always a misc check that takes forever to clear. At the end of the 30 days start a checkbook. You know the old fashioned ones in writing and only go off your list. Do check it against your bank monthly of course but that should clear it up. My bank is a PITA because they will "hold" items for days before clearing them. For example, I will used my card at walmart and it will take 4-5 days to show in my bank. It is really bad if I do something on a friday evening. That will never show until at least Tuesday. and that is the earliest. I am getting ready to do another 30 day thing and then I give up on the bank and will run my own ledger.

2. When your deposit hits your bank write that amount down. Do not use any prior moneys that may or may not be there. Start from scratch basically. Follow the ledger thing above and hopefully within 30 days you should know exactly what is in the account.

[disneysteve]

cicy, I don't see how what you describe will help OP find any previous errors.

I don't know about anyone else, but there is no way I could go 30 days without using my checking account. It is the only account we have from which we pay bills, many of which are on auto-pay or get paid with online banking. Some of our investments also draw automatically from that account. I can't just turn all that off and I wouldn't want to. And again, I'm not sure how it will help balance the account. You still need to go back and find the error(s).

[disneysteve]

Radiance, after re-reading your post, I'm wondering if I misunderstood. I never know exactly how much is in my account at any given moment because there are always transactions pending. I know from my checkbook register how much will remain once all pending transactions clear. Then each month, I use the bank statement to balance the account, including all pending transactions. if I can't get that to balance, I go back and recheck everything. Usually, the problem is either a math error on my part or failure to record a transaction on my part. On a few occasions, though, I have found bank errors.

[minnie1928]

Virtual envelope, do you mean that the money physically stays in the checking account but you allocate it , on paper, to another account. If so, then you will need to add the balance of your virtual account to the balance in your checkbook in order to reconcile to the bank statement. If you haven't been reconciling your account, then you may have to "plug" the difference and start balancing going forward.

[cicy33]

Originally Posted by disneysteve

cicy, I don't see how what you describe will help OP find any previous errors.

I don't know about anyone else, but there is no way I could go 30 days without using my checking account. It is the only account we have from which we pay bills, many of which are on auto-pay or get paid with online banking. Some of our investments also draw automatically from that account. I can't just turn all that off and I wouldn't want to. And again, I'm not sure how it will help balance the account. You still need to go back and find the error(s).

It will help because currently OP is not sure how much money is even in the bank. Also, apparently OP is not writing it down and keeping a written track of what is being spent. So as a result OP is never sure why the account is different than what they thought. This system will actually correct both areas. One, OP will figure out to the penny what is in the account and two, will know what is in the account because it is being written down instead of just watching the bank online. That is obviously not working.

In your case (just an example) not being able to go 30 days the situation of simply starting over with the current deposits would work. I feel that I am reading the situation here is that OP needs to keep track of every penny and that is best done when it is wrote down. I have in the past (and am still guilty of it) following the online bank to keep track and as I posted above my bank makes it VERY difficult so I am never sure what has cleared and what has not until days to a week later. If I had kept a written ledger I would know exactly where I am. Does that make more sense?

[cicy33]

UPDATE: granted this system does not account for any math errors! anyone can subtract or add wrong. But by balancing at the end of every month or even every week that should catch those errors.

[cicy33]

Originally Posted by disneysteve

cicy, I don't see how what you describe will help OP find any previous errors.

I don't know about anyone else, but there is no way I could go 30 days without using my checking account. It is the only account we have from which we pay bills, many of which are on auto-pay or get paid with online banking. Some of our investments also draw automatically from that account. I can't just turn all that off and I wouldn't want to. And again, I'm not sure how it will help balance the account. You still need to go back and find the error(s).

I actually have one auto draw on my account but that is it. I really don't like auto draws. What if payday falls different one month than the date? I always worry and unfortunately I just don't always have a lot of money in the bank. So I can see why you wouldn't like it though.

[disneysteve]

Originally Posted by cicy33

apparently OP is not writing it down and keeping a written track of what is being spent.

will know what is in the account because it is being written down instead of just watching the bank online. That is obviously not working.

I have in the past (and am still guilty of it) following the online bank to keep track

Ah. Now I see. You (general "you") CAN NOT depend on the bank balance to know how much is in your account because that number is never up to date. You can only depend on your written record (or computerized record if you do it that way). In my case, the current balance showing on my account according to the bank will often vary by $2,000 or more from what I know to be the actual balance because I know what payments have been made that haven't cleared yet. There is no way I'd ever depend on the bank balance online or at an ATM to know how much money I have available to spend. That would lead to trouble very quickly.

[cicy33]

Originally Posted by disneysteve

Ah. Now I see. You (general "you") CAN NOT depend on the bank balance to know how much is in your account because that number is never up to date. You can only depend on your written record (or computerized record if you do it that way). In my case, the current balance showing on my account according to the bank will often vary by $2,000 or more from what I know to be the actual balance because I know what payments have been made that haven't cleared yet. There is no way I'd ever depend on the bank balance online or at an ATM to know how much money I have available to spend. That would lead to trouble very quickly.

Exactly. Depending upon the bank online is a dangerous thing to do. It never works in my favor by the way!

[disneysteve]

Originally Posted by cicy33

Exactly. Depending upon the bank online is a dangerous thing to do. It never works in my favor by the way!

I don't understand why anyone would ever think to do that. If I write a check today and mail it to the electric company or my mortgage company or whoever and I check my balance in a day or two or three, it won't reflect that check yet. The bank doesn't know I wrote the check until it clears my account. Some of the checks I write don't clear for a couple of weeks after they are written.

Again, the only accurate and up to date record of your account balance is the record YOU keep.

[cicy33]

I have a bad habit of thinking that as soon as I use my debit card it is immediate. I hardly ever write a check. seriously like maybe one a month.

[disneysteve]

I write maybe 5-6 checks per month to places that don't take electronic payments like the lawn guy or our synagogue. Even with electronic payments, though, it isn't instant. I may go online and schedule my mortgage payment 10 days before it will actually come out of the account. My written record reflects it right away but the bank balance doesn't show it until the payment is actually made.

[cicy33]

Pretty much when I make a payment online and I think I only have two, it is generally scheduled the next day. I have, actually 2 payments that come out auto. insurance and a snap on bill. both are really small so I can easily keep track. For the most part I use my card for everything. Even when I pay things online I am using my card information. I don't do it with checking account info.

[Radiance]

I think, or thougt that the online balance should always be explainable by balancing the checkbook. I dont have to wait for month end to balance out.
THis is where I have failed thus far, the mistery steams from the days I didn't have a budget.

In any case, when the month is done I want to know how much was left over before my salary deposit comes in. Depending in how much is left I could decide to send some to my savings account or use it against paying off debt.

Let's say that by the time I get my salary deposit I balance out and have $257.38left from previous pay period. I could decide, in confidence to send 57.38 to savings. Right now I don't know.

So, I think this would actually work for me and it is the easier of the two:

2. When your deposit hits your bank write that amount down. Do not use any prior moneys that may or may not be there. Start from scratch basically. Follow the ledger thing above and hopefully within 30 days you should know exactly what is in the account.

I check my bank transactions almost every day, and I record and extract the moneys from the proper envelops. If the bank shows a charge of 31.43 at Shell, I record an expense for Gas under Transportation. So it comes to reason that at every point I should "agree" with the online balance. Thank you Cicy for the idea, I will do so 3/31!!! From that point on, I will be able to leave $200 on the account and the rest goes to savings.

[disneysteve]

Originally Posted by Radiance

If the bank shows a charge of 31.43 at Shell, I record an expense for Gas under Transportation. So it comes to reason that at every point I should "agree" with the online balance.

Make sure that the $31.43 charge the bank is listing is correct and matches up with your receipt for that transaction. Mistakes do get made and that is one thing that can definitely throw you off from balancing. Don't ever assume that the bank statement is correct.

[creditcardfree]

If one is tracking all their transactions in a register of some sort, whether on paper, excel or other application, and you know you have recorded everything, then the amount in your register the day before you get paid is the extra in your account.

Of course, as I think was stated earlier, you need to know that you balance is correct at some point to have confidence in the numbers. Once you get that clear and balance your checkbook regularly, as well as, record all transactions as they occur you will know your balance at all times.

I almost always transfer the extra to our second checking account each pay period. It ranges from a couple dollars to a couple hundred dollars, depending on the month.

[Radiance]

Make sure that the $31.43 charge the bank is listing is correct and matches up with your receipt for that transaction

ouch

I am not yet at that level of sophistication. All I do is ensure I recognize the transaction and that the amount makes sense. I dont keep receipts.

Anything from 30 to 33 is acceptable for Gas...I am not ready to check those pesky receitps.

[elessar78]

My one failure (among many) as an adult is I can't balance my checkbook. I have a system that is essentially a running total (written down) of deposits and debits from my account. I plan our spending 4–6 weeks in advance and I can cross reference between my online account and what's written down so I know the bank has not made a mistake.

The automatic withdrawal, I only have one, for our savings tends to throw the bank balance off because it takes a few days to clear. I've just learned to trust my system because I've been using it for 5 years with very few mistakes.

I've tried to migrate to software but I'm never as comfortable with it. One day I will get a programmer to write software that works around my system.