How And Why: Check Register

Note: I am NOT professionally trained, nor a professional financial expert in any way. Just a semi-ex bookkeeper who is now taking care of the family finances, and who wants to share how she does things with anyone who's interested. 

It's been awhile since I've done a financial related post. Today I thought I would go over a check register (or ledger), how to keep one, and why you should. This is probably because check registers have been on my brain since I am debating changing from Quicken to just good ol' Excel. But more on that later.

Check Register 101
Before I get into the how and why, let's look at what a check register is. Dictionary.com defines a register as

"a book in which records of acts, events, names, etc., are kept."

A check register, therefore, is just a book were said records are of checks, or financial transactions. I know now-a-days most people don't use actual checks much, but any transaction from your checking/savings/whatever account, be it with debit card, ATM withdrawal, online transfer, etc, can qualify as a "check" and needs to be recorded.

The How
Keeping a check register is actually pretty easy. It might be a little confusing at first for someone who has never done it, but once you do a few entries you'll have it down.

A check register consists of a number of different columns - from basic registers with just a handful of columns, to very expanded ones consisting of many, many more. Each column has a title and describes what will be going in those columns. A very basic check register will look something like this:

You can see there is a column each for the date, the check number, the payee, the payment amount (if applicable), the deposit amount (if applicable) and the balance once the transaction is done. In this example you see that on August first there was a check, numbered 1055, made out to Bob's Grocery for $50.00, and that after that check was written there is $50.00 left in the bank account.

Each transaction will go along the same lines, putting the payment or deposit in the appropriate column, and totaling the new balance as needed. To do this you would add or subtract the amount (payment or deposit) from the balance on the previous line. (In the example you see $50.00 has been subtracted from the $100.00 "starting" balance.)

More advanced versions might have columns for a "Memo", where you can put a description of what you bought ("diapers & milk"), and/or columns for a category so you can keep track of your spending for things like "groceries" or "rent". Extra columns like that come in handy if you're trying to stay within a budget.

That's it! Mostly. Just fill it out to keep a running total of what you have left to spend. If you are not using a check then you can replace the check number with maybe a transaction number from your receipt, or most of the time I just put "debit" or "online", just so I know how it was payed. The "starting balance" at the top is what you are starting with when you begin a new register. It will either be the ending balance from your last bank statement, if you're starting from scratch (be sure to add in any transactions you've done since the statement ending date), or the ending balance of your previous register, if you're just starting a new one.  And now, the why!

The Why
A lot of people don't keep check registers. A lot of people say things like "Oh, I keep a running total in my head" or "Well, I just check my balance with my online bank access". And that's all well and good. Until you forget. Or until it's been 3 months later and your electricity company calls you, screaming that you never payed that bill for $46.83, and you don't have any backup of when you payed it and how.

There will be a day that you forget something. If you're one to check your balance online, it can take a few days for the transaction to come out, so you might think you have more money than you really do and overspend. If you're a "total in my head" person, what happens if you have a crazy busy day and something slips? Best case scenario, you're just a few bucks shorter than you thought. Worst case scenario, you've overdrawn your account and now you have overdraft fees, bounced checks, and they're declining to take your debit card for that loaf of bread and eggs you really need right now. It happens, even to elephants.

So, to avoid all that, just keep a check register! It doesn't take much time. You could save all your receipts for the week and update it once a week, or update it at the end of the day. Whatever works best for you. Just do it! It will also give you the opportunity to do a bank reconciliation. But that's another show post!

The Versions and Where to Get One
Ok, I've got you convinced. Now you really want to keep a register of your own. But where to get one? How? You've got a LOT of options. Honestly, you could get started with just a piece of paper, a pencil, and a calculator. Just make a grid with columns and a couple of rows, like the example above, and fill it out! If that's a little prehistoric for you, try these options:

•  If you get checks from your bank, or another company, most of the time they come with a little checkbook sized register. Use that! Free with the purchase of checks!
• Most office supply stores carry various sizes of register/ledger books. They'll be anywhere from about $8-$20 depending on the size and complexity. You might even be able to find one in the stationary section of your grocery or drug store.
• Have Excel, or another spreadsheet program? Make your own register, just like above. You can even use Google Docs (just like above). And if you're really tricksty, you can make the Balance column do the math for you with a formula! If you've already got the program, or want to use Google Docs, then it's free!
• There are various online sites that offer check registers. The newest kid on the block, that is all the rage, is Mint.com. Some are free (like Mint) some are not. If that's the way you want to go, cool! Personally, I get a little weirded out with the idea of putting all my financial data onto a website. (It could be argued that it's all there via my online bank access, but still. It just wigs me a little bit.)
• Software, software and more software! There are numerous pieces of software that will do all the tracking for you (well, once you input it of course). Quicken is one, which I use, but there are many others. They are a little pricey (about $40 and up), but they can track multiple accounts, assets, liabilities, generate reports, sing and dance. It depends on what you want to pay for.

I have been using Quicken since I started a checking account (around 16) and while I like it, I'm not quite "feeling it" anymore.  I think it is just a little too much for what we need now. For one, it runs everything by date - which is how accounting works! - but sometimes I will buy groceries at the very end of the month and they count for the next. So when I run a report to see where I'm at, the totals are off. I have been running all our budget tallies through Excel anyway, so I might as well just move everything over rather than have 20 different programs to track the same thing. But I digress.

If you'd like to go the spreadsheet route, but aren't sure how to get started, I am in the process of creating a few different versions, with and without spending category columns, and will let y'all know when they're done so you can get a shiny copy of your own!