Discuss how to manage a checkbook and checking account; account for cash

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One of the most fundamentally responsible ways of managing your daily financial affairs is to know how much money you have available in your checking account. In addition to taking accountability for ones' own money, keeping a balanced checkbook also provides economic advantages. The overdraft fees that can be saved are substantial. When you consider that banks make a large portion of their profits from the fees that they charge, as much as $25 to $35 per occurrence for a bounced check, you can see how that "free" checking account is not really free. Add that to the fee that the merchant charges for a "bad" check (anywhere from $20 to $40 is normal) and you've already paid $50 or more, and you still have to pay the original purchase amount.

Other disadvantages of overdrawing your account can be even more severe. You may lose your check-writing privileges at the store where you made the purchase, as well as numerous other stores that you didn't even shop in. A bad check or debit card purchase at one member store can get you barred from using anything but cash at literally thousands of other shopping locations. And if you fail to cover the bad debt, you could find yourself in collections, which might lead to a lower credit score and the numerous drawbacks associated with it.

Keep your checkbook balance current. The first thing that is necessary in keeping your account managed properly is to be aware of all potential fees that could be charged to your account. Banks are required to give you a Fee Disclosure Statement before opening your account. Look over the disclosure carefully. Is your checking account free with no minimum balance requirement, or is there a charge if you fall below a minimum amount on deposit? You must, therefore, be fully aware of the fees that could be incurred.

If you are just beginning to keep a register, you must identify an initial balance. For a new checking account, this is easy: it's your opening deposit. If the account has been in existence for awhile, it's a little trickier. You'll need to keep the account inactive for a few days. Don't write any checks or make any debit card purchases. This will allow any outstanding checks or debits to post to your account, and give you an up-to-date balance. A bank representative can tell you when an item posts (or is subtracted from or added to your account's balance). Once you're sure that all recent purchases that you've made have been accounted for according to the bank's records, use the balance that they give you as your initial balance.

Starting with the top line in your checkbook register, write your initial balance to the far right. Enter the date, along with a description of the entry ("Initial Balance", for example) on the same line. From ...