45. Use This Simple Check Register System

When I got rid of all but one of my checking accounts I still found it convenient to have separate categories for my expenditures, so I set up those categories in one account and used check registers to keep those categories separate.

For example, now I maintain three categories in my checking account: Household, Savings, and Investment. I use two standard wallet-sized check registers, fitted together on one side of my checkbook; on the other side I keep the checks.

Since I write more checks from the Household category, I label the first check register “Household.” Then I divide the second check register into two categories, “Savings” and “Investments.”

For ease in reconciling bank statements, I enter all my deposits in the “Household” section, and then “transfer” funds to the other sections, as needed. To do this, I simply make an entry in the “Household” section that reads “Transfer to Savings” and then list the amount, one thousand or whatever, in the debit column, and deduct that from the Household balance. Then I immediately turn to the “Savings” section, and make the appropriate entry, “From Household,” and indicate the amount in the deposit column, which is then added to the balance in that section. If we decide to make a purchase with the money we have set aside in Savings, I simply record the check in the Savings section of the check register, and then deduct the amount from the total shown there.

It’s the same with money shown in the Investment section. When we have built a sufficient investment balance, I write a check, say for a mutual fund purchase, and record the check in the Investment section of the check register, and deduct it accordingly.

When it comes time to reconcile a bank statement, I first sort the checks by category (Household, Savings, Investment), then go through each section of the check register and cross off the checks accordingly. Since all the bank deposits are shown in the Household section of the register, it’s easy to confirm that each deposit is shown on the statement.

By maintaining these divisions internally in one account, I’ve eliminated all the other bank accounts, the other checkbooks, the other bank statements, and the need to reconcile them all. Obviously, you can set up any other categories that suit your personal needs. Just don’t get carried away. Remember, the objective is to keep it simple.