How would you reconcile your bank account to avoid spending more than you have?

How would you reconcile your bank account to avoid spending more than you have?

a. Contact your financial institution to read your transactions for the past month

b. compare your own records of your spending with your financial institution’s records

c. review your bank statement once at the end of the month

d. none of the above

Answer: b. compare your own records of your spending with your financial institution’s records

Reconciling bank statements is a fundamental action to perform as it helps you to avoid spending more than your capacity or identifying that there is no logical relation between what you documented and the bank. There is only one method that is practicable, which is to compare the records made by the personnel on the spending to the records of the financial institution on the spending routinely. It involves keeping a record of all your financial transactions in a chequebook register, informal diary or budgeting computer software. Afterwards, you merely balance these entries with the account totals on the bank using the online banking terminal as well as the monthly bank statements.

For instance, expenditure records might look like the following; Lighting, 2,000; fuel, 3,000; salaries, 10,000; in this case, you may be using a ledger whereby the above expenditure records are recorded in a spreadsheet. Here are the entries into the grocery purchase of $ 50, the bill paid of $ 100 and finally the paycheck deposit of $ 1000. Occasionally, you also verify particulars on your bank statement or on your chequebook and entries that are in these two are compared. In this case, assuming for reasons best known to you, you failed to record something, or the sum is not as you expected it to be, then you can try to find out why and correct it immediately. It allows for a regular comparison that will enable you to detect mistakes and always have a vision of the fraudulent activity, as well as the overall picture of your finances. The reconciliation should be done more often for instance weekly or bi-weekly so that you are always on top of your money, you will not be incurring overdraft charges and you will be using your money to fund your expenditures as per the real figure.