First of all, what is a checkbook? It’s usually a little blue and white line booklet that has words like “transaction” “payment” and “balance” across the top that comes with your checks every time you order them. It’s also referred to as a transaction register (the two terms will be used interchangeably throughout the article).
A checkbook is what you are supposed to use to record your transactions… and as a general rule, you should have a separate one for each account you have. That means a checkbook for your checking account and a separate one for your savings account.
The top of the transaction register may look something like this:
and the labels are defined as follows:
Of course there are slight variations of each label, but the general idea is to clearly record your transactions so you will know what your balance is.
So how do you use it? Actually, it’s very simple. There are two basic methods that people use to fill it out - single line and double line format. The single line format uses only one line in your checkbook to record the whole transaction, while the double line format uses two lines (a white and blue line). Both methods are shown below to illustrate the differences between the single line and double line methods.
Single Line -
Double Line -
Here we see that check number 200 was used on May 1st to pay XYZ, Inc for services rendered (detail can be added) for $40.00. And as a result, we show a remaining balance of $960.00.
Say that you made a cash ATM withdrawal, or maybe you deposited a paycheck (or have direct deposit) or made an online payment without the need of a check. You would make entries like the following:
Single Line -
Double Line -
So which method should you use? Whether people prefer the single line method over the double line (or vice versa) is a matter of personal taste and what kind of information you are recording. Some people like to record details so that they remember what the transaction was for when they review and balance their checkbook later, while others may not care as much. Some people rarely use their bank account or only use it to pay certain kinds of bills on a monthly (or other predictable) basis.
There are other reasons people prefer one over the other. For example: the double line method makes the math a little easier since everything is lined up like a regular math equation. But at the same time, this can make things a little confusing - was that $40 the balance or the deduction? And so on. Single line has all the information on one line, with the (+) or (-) shifted to the left and the balance at the end, so you would see a running balance at all times. But it’s often hard to find your mistakes this way and they are not as easily corrected as in the double line method.
Personally, I use the single line method because it saves space. Rather than using two lines, I’ve opted for one and I skimp on details because I know there are only a few things that I pay out of my account every month. I also use a pencil rather than a pen to record my transactions because I make mistakes and it’s quicker and cleaner than using white-out.
However, the last few months I’ve been using an Excel spreadsheet as my transaction register. Yes, it’s part of being “greener” by using less paper… but I’ll admit that I’m no jolly-green giant yet. So, you can keep track of your green while you are green… Yeah, bad joke, but FYI: make sure that you make regular back-ups of your files or set up your computer to include it in the automatic backup. It’ll save you grief later.
Another option is to use personal accounting software, such as Quicken (or Quickbooks, for my fellow entrepreneurs). As of yet, I do not use these programs. My accounts are not very complicated and I do not need all the bells and whistles to categorize and analyze my spending. And the same probably goes for most people in their twenties.
Keep in mind that even though you think you can keep track of what you spend your money on, you should still maintain your checkbook and keep your receipts. It’s very easy to forget exactly how much you spent and what you paid for.
And yes, I understand the argument that it is not practical to carry around your checkbook (since most of us don’t use paper check anymore) but this does not relieve you of keeping record. Even if you cannot get to your checkbook after every purchase, keep the receipt and store them somewhere to be recorded later on.
Any comments or questions, let me know.
~K
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