Reconciling Your Accounts: What It Is and Why It Still Matters

Reconciling an account means checking your own records against the bank’s statement and making sure they agree, to the cent. People used to do it with a checkbook register and a pencil. With online banking, many people assume it’s no longer necessary: the bank shows the balance, so why check it?

Because your records and the bank’s can drift apart in ways neither of you notices. And if your budget, reports and net worth are built on records that are slightly wrong, every decision you make from them is slightly wrong too. Reconciliation is the step that makes the rest trustworthy.

What reconciliation actually checks

When you reconcile, you confirm three things for a statement period:

1. Every transaction on the statement is in your records, with the same amount.
2. Every transaction in your records for that period is on the statement, or is genuinely still pending.
3. Your balance, after accounting for anything pending, matches the statement’s ending balance.

If all three hold, the account is reconciled up to that statement date, and you can treat everything before it as settled.

Why it still matters

Imports and syncs make mistakes

Downloaded transactions are usually right, but not always. A file imported twice can duplicate a month of transactions. A bank can change how it formats descriptions and break an import. A transaction you entered by hand can be imported again from the bank. Reconciling catches these.

Your own entries make mistakes

Typing $45.00 instead of $54.00, entering a payment in the wrong account, forgetting a cash withdrawal. Small errors compound.

Banks make mistakes, too

They’re rare, but double charges, incorrect fees and payments that never arrived do happen. If you never compare, you’ll never find them. Many banks and card issuers set time limits for disputing an error, so finding it within a month matters.

Fraud often starts small

A $1.99 test charge from an unfamiliar merchant can be the first sign that a card number has been stolen. Reconciling means you look at every line at least once.

Net worth depends on it

Your net worth is the sum of your account balances. If one balance is off by $300, so is your net worth, and so is every trend line built on it.

How to reconcile, step by step

You’ll need the statement (paper or PDF) and your records for the account.

1. Start from the last reconciled balance

Your records should show the balance as of the last time you reconciled. It should equal the opening balance on the new statement. If it doesn’t, something changed in an already-reconciled period; find that first.

2. Tick off matching transactions

Go through the statement line by line. For each transaction, find it in your records and mark it cleared. Check the amount and the date. Work in order, and don’t skip ahead.

3. Look at what’s left

You’ll end up with two short lists:

• On the statement but not in your records: usually fees, interest, or something you forgot. Add them.
• In your records but not on the statement: usually cheques that haven’t been cashed or payments still pending. Leave them uncleared. If something is old and should have appeared, investigate.

4. Compare the balances

Add up your cleared transactions from the opening balance. The result should equal the statement’s ending balance exactly.

5. Lock it in

Once they match, mark the period reconciled. Reconciled transactions shouldn’t be changed afterwards without a good reason, because editing them would break the match.

A worked example

Here’s a checking account. Opening balance on the statement: $2,450.00. Ending balance: $2,292.55.

Your records for the month, before reconciling:

Date	Description	Amount	On statement?
3rd	Paycheck	+$2,600.00	Yes
5th	Rent	−$1,650.00	Yes
9th	Grocery store	−$142.30	Yes
14th	Electric bill	−$96.40	Yes
18th	Transfer to savings	−$500.00	Yes
22nd	Pharmacy	−$38.75	Yes
27th	Cheque to plumber	−$180.00	No
29th	Grocery store	−$124.90	No

The statement also shows something you didn’t record: a $10.00 monthly service fee on the 30th.

Now work it through. Add the fee. Then sum the cleared items from the opening balance:

$2,450.00 + $2,600.00 − $1,650.00 − $142.30 − $96.40 − $500.00 − $38.75 − $10.00 = $2,612.55

That doesn’t match the statement’s $2,292.55. Your cleared total is $320.00 too high.

A difference of a round amount is a clue, so scan the statement for $320.00. There it is: a car insurance payment on the 25th that you never entered. Add it and clear it:

$2,612.55 − $320.00 = $2,292.55. Reconciled.

The plumber’s cheque and the grocery trip on the 29th stay uncleared. They’re real, they just hadn’t reached the bank by the statement date, and they should appear on next month’s statement. Your register balance, including them, is $2,292.55 − $180.00 − $124.90 = $1,987.65, which is what you actually have to spend.

That’s typical. A first pass leaves a difference, and the difference is a clue. Here, the reconciliation found a missing insurance payment and a $10 fee you might want to ask the bank about.

When the numbers won’t match

Some tricks for finding the problem:

• Is the difference equal to one transaction? Look for that amount.
• Is it twice a transaction? You may have entered a deposit as a withdrawal, or the other way round.
• Is it divisible by 9? That often means two digits were swapped ($54 entered as $45 gives a difference of $9).
• Is a transaction in the wrong account? Common with several cards.
• Did the opening balance change? Something in a previously reconciled period was edited.

How often to reconcile

Monthly, when each statement arrives, is the standard. For accounts with few transactions, quarterly is fine. For busy accounts, or right after switching to a new app, monthly is worth the fifteen minutes.

Reconciling in Kemback

Kemback has a full register with cleared and reconciled status, and a reconciliation step that works against your statement’s ending balance. Once a period is reconciled, those transactions are locked so they can’t be changed by accident; you can unlock one deliberately if you need to correct it. When you switch from Quicken, the import checks every account balance to the cent, which gives you a reconciled starting point to build on.

#reconciliation #accounts #financial basics

This article is general information, not financial, tax or legal advice. For decisions about your situation, talk to a qualified professional.