If you can imagine, there was once a time where checks were written and personal transaction logs filled in. Doing this ensured accurate accountability of your money whether those checks had been processed through your bank account or not. With the disappearance of checks and the rise of the digital dollar, that balancing act seems to have disappeared with them.
But what else is there besides your bank statements?
Fortunately, I have a solution! Below I give a quick and easy way to set up a transaction log for yourself.
Find your medium. In order to track and log all of your transactions outside of your bank statements, you’ll need something to do that on. Here are a couple of items I recommend:
- A small notebook: If you’re a stationery kind of person, you’ll need a notebook dedicated to being your bank log. It doesn’t need to be fancy, but it does need to be wide enough for at least four columns. The advantage of this is that you can easily carry your log with you anywhere just like traditional checkbooks.
- A Small binder: Using a binder allows for storing additional items like receipts or a calculator.
- Computer program: Any program that allows you to type in it and perform calculations is great! If you’re not formula-savvy, I’ve created a form that you can print or edit electronically.
Head on over to the FREE resource library to download your copy of the interactive Account Register!
Create a table. If you’re using pen and paper, you’ll need to draw out six columns on each page. Once you have them drawn, label them like the picture below. (Note: If you have a small notebook only big enough for four columns, combine the “Payment” and “Deposit” columns, and get rid of the “Pd” column.)
Choose an account. Each account you are tracking should have its own notebook, separate section of your binder, or a different computer spreadsheet. We’ll start with just one account for now, and then you can apply all of these steps to subsequent accounts in the future.
Once you’ve decided which account you’ll be working on, find the most current balance where all transactions have processed through your bank. This will give you your beginning balance to put in the first row. (Note: If you have any pending transactions or anything that is not showing on your bank statement, don’t count those just yet.)
Add new transactions. Next, add all transactions that have not yet processed through your bank. This includes items that are pending or not yet posted.
For instance, I went shopping at Target and then had lunch at Wendy’s. Online, Wendy’s is showing as a pending transaction and Target isn’t showing at all. I would still add both items to my ledger because I want to show the money that I spent, regardless if it has gone through my bank yet or not.
Then, write in all your bills that need to be paid for the current pay period. (Read more about pay periods in my post How to Create A Basic Budget.) This way you can account for money that will be spent before it goes through ensuring you don’t overdraft your account.
Mark your transactions. You’ll need to mark the “Pd” (shorthand for paid) column for each transaction. Whenever you log a purchase you need to verify if it’s been paid through your bank account, or if it’s just pending. Here’s what to write in that column:
- New transactions. Whenever you log a new transaction, leave this column blank until it is pending or processed.
- Pending transactions. Mark a ‘p’ to represent items that show in your bank account (usually labeled as pending). It is important to mark items as pending because sometimes the original amount of a purchase is different from the final amount. This usually occurs in instances like tips at a restaurant.
- Processed transactions. Mark an ‘x’ for all completed transactions. The dates and amounts for these items should not change and can be used to validate your account balance.
Logging all of your transactions throughout the day will help you stay on top of your finances and even alert you when things aren’t adding up.
FOOD FOR THOUGHT
I highly recommend checking your bank account, either online or through your banking app, to verify transactions at least two or three times a week. If you’re keeping up with logging, this shouldn’t take more than five minutes and you’ll know how much you should have in your bank account better than the bank!
Let me know in the comments how you keep track of your bank account.
Everything we do is linked in some way, so be sure to check out my other posts on quick and easy life skills.