Finance is a scary prospect for most people. Trying to keep up with income, expenditures, and still put some money away in savings is crucial to fiscal success. One of the most important factors in financial health is knowing how to balance a checkbook.

Keep in mind, a checkbook doesn’t necessarily mean that you only write down the items you write physical checks for, like bills. It includes any activity that revolves around your checking account, including automatic deposits and bill pay, check cards, and other electronic withdrawals and credits.Knowing how to balance a checkbook starts with the right tools.

First, you need a calculator, unless you’re one of the small minority who have a genius level IQ and can compute large lists of numbers in their head. If you are not so gifted, as most aren’t, you will either need a calculator or a computer spreadsheet program such as Excel , Access, Money, or equivalent.

The next thing you need are all the receipts from the month. If you have not collected the receipts from all your purchases, start doing so, to ensure that you can prove that every charge to your account is accurate (and argue with the merchants if it is not). Also, have your most recent bill statements ready. This may be utilities, taxes, credit cards, and online statements. These, too, need to be included in your balance sheet.

And finally, don’t forget to have your pay stubs and any deposit slips from other income (i.e. gifts or donations) you may have put into your checking account. Once you have all this information, look at your written check register to ensure that every entry you have made matches one of these receipts, statements (bills) and pay stubs. If there is an error, such as a merchant charged you twice for an item, call them and see what you need to do to clarify this matter. Most merchants are good about clearing these matters up, as long as you can produce a receipt.

After that, it’s simple math. With your calculator, or by a spreadsheet program, add to your existing balance all income (from your paycheck, from gifts, etc.). Then subtract all of your receipts and bills. The end result is the balance you have in your checking account. There are even easier ways to do this – many banks will have online access to your checking account, where you can track your expenditures and balance on a daily basis. This is particularly ideal if you don’t enjoy reconciling your bank accounts, or if you have a trustworthy bank.

Knowing how to balance a checkbook is crucial, even if you access online account information, because banks and merchants sometimes do, in fact, make errors.

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