In high school we learned all about the earth, frogs, equilateral triangles, wiffle ball, sewing a pillow, legislature, took a science field trip to hike up a mountain (20 miles in one day), kissing boys, smoking in bathrooms, Beowulf, how to drive a car, iambic pentameter, but we never learned how to do basic banking. I even took Home Economics and the closest we got to a checkbook was practicing writing on a photocopy of a check, and we planned a weeks worth of food and then went to the grocery store to see if we would have stayed under our budget. This was in the 90's. Sure we were still using five inch floppy disks, but basic banking had been invented by then and as public school educated individuals, you would think this could have been glossed over at least once.

That being said, here are the basics that everyone needs to know to balance their own check book. After this, your checkbook should be a piece of cake. Most important financial rule ever #1: know that your checking account is made up of three parts, the money in, the money out, and the balance after each, you and only you are responsibly for keeping track of this. The easiest thing about that is that if you write down all the money in and all the money out, you will know the balance and not overspend what you don't have. The last thing anyone wants to see is an overdraft in their account immediately followed by an overdraft fee.

For those of you playing at home, an overdraft is when you have five dollars in your account but you spend ten dollars. The bank basically lends you the extra five that you didn't have but charges you for letting you use it. Most of the time the charge is anywhere from $25-$35. If you didn't have the extra five, chances are you don't have the extra $35 either. It will leave such a taste in your mouth that you will never want to overdraft again. If nothing else, that reminder that there could be a fee in your future should be enough incentive to write down the money in, the money out, and the balance.

Why keeping your record matters

What can make this tricky? The balance in your book isn't always going to be the same as the balance that the bank has. Why is that? You know everything that is going to happen in your account. The bank only knows what has happened in your account. If you have $60 in your account and you write a check to Chadwick's International Seafood Buffet for $30 dollars, your balance says you have $30 left. Right? (If this doesn't make sense by now go back to the top and start again.)

Now, let's say the check takes four days to clear the bank. ("Clear" is fancy lingo for Chadwick's took the check to their bank, who sent it to your bank, who took the money from your account, and gave it to Chadwick's bank, who put it into Chadwick's account.) So, four days to clear. On day one you know the check has been written and that you have $30 left. On day two you know this. On day three you know this. On day four you know this. However, if you were to call the bank on day three, they would tell you without a doubt that you had $60. Why? Because they can't see the check floating around in the world even though you know you wrote it. This is why it is so important for you to keep your own record of what is in your account.

How to actually "balance" the books

Now, the statement comes in the mail. We already know that the bank doesn't know everything that is going to happen, but they do know what has happened. Take your checkbook and your statement and compare the two. Everything that is on the statement should be on your checkbook, the dates should be the only thing different, (there's that idea of "clearing" again, delaying information). There will be items in your checkbook, however, that aren't on the statement, that's okay.

So, you're comparing the two. Anything on the statement that has "cleared" take a pen and check it off on your register. (There actually is an column for that.) Now here's the key; some items are now checked and some aren't. For the last hurrah, take the final, ending balance from the statement, whatever that amount is. Now, subtract all of your unchecked money out items from that amount. Then, add all of you unchecked money in items to that number. That final number you get "should" be the same balance as what you have in your last checkbook entry.

Whew! If the balances are the same, wipe your forehead and chill for the next month continuing to write down everything you do in your account. If that balance is not the same, go back and check to make sure you have all the items written down that the statement has printed on it. If you still can't find it, feel free to call or go into your bank and talk to an associate to see what you may be missing. If you are good about balancing your books, and you balance every month to the penny, then you are well on your way to being a banking basics pro. Next, we can start making a budget by learning where the money goes!