“I use a chequing account to pay many of my bills, but I’ve never bothered to balance the cheque book. Recently I had a cheque returned, although I was so sure that I had enough money in my account.

“Now I’m nervous whenever I have to write a cheque as I don’t want to be embarrassed another time. How can I prevent this from happening again?”

Keeping track of your personal finances can be hard. The average consumer may be overwhelmed with a lot of paperwork- bank account statements, debit and credit card receipts, insurance updates, and new product promotions.

Sometimes the temptation is just to glance at the mail and file it away for another time.

As you have learnt, it can be risky to ignore your chequing account statements. Some of us can relate to the embarrassment of seeing one of our cheques with a big NSF (non sufficient fund) stamped across the face. Even if it the account was overdrawn accidentally, it is not a scenario that we would ever want to repeat.

Your distressing moment could have been prevented if you had taken the time to keep tabs on your cheque transactions regularly. Statistics show that most people don’t keep a running balance in their chequing account, or even look at the monthly statements.

Some people just call their bank to determine the balance, and write a cheque accordingly. This is not a good way of finding out how much is in your account, because there could be outstanding cheques that have not been presented at the bank for payment yet.

Take control of your finances by balancing your cheque book every month. You don’t need accounting experience to do this- in fact if you can use a calculator, you can keep proper records easily.

The first step is to make a note of the transactions as soon as you write a cheque. Your chequebook will either have a stub at the left, or there will be a separate book where you record the details. There is a section for the date, and one to enter the particulars so you can remember why you wrote the cheque.

Then you make note of the amount on the cheque, or the deposit that you’ve made to the account in the relevant spaces. Next, you simply add or subtract from the previous balance on the account, to arrive at the amount left in your account.

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However, it’s not enough to stop there. It’s very important to look on your statement every month to ensure that your records and the bank’s report correspond. First you need to subtract all the service charges that may have been deducted.

If you use your chequing account for pre-authorized payments for insurance or other expenses, check that the deductions are being made on time and accurately. You also need to ensure that all the cheque figures match your records, and that your deposits are all accounted for. Remember that the bank can make mistakes too!

In addition to balancing your cheque book on time every month, here are some other steps that you can take to prevent your cheques from turning into rubber.

1. Lodge an extra amount that you don’t record in your cheque book, and forget about it. This gives you a safety cushion that your ‘real’ balance is always a little more than you allow yourself to spend.

2. Remember that your deposits may not be immediately available. If you’ve lodged a cheque to your account it may take two or more days to clear. Verify the cheque holding time with your financial institution.

3. Be careful of postdated cheques when there’s no money in your account. If the money that you’re expecting to go into your account in the future doesn’t arrive, then you have a potential bounced cheque to deal with.

There is also the possibility that the holder of the post-dated cheque could lodge it early and cause your account to go in overdraft. I have seen a case where that happened with a business account and it put the company in such a bad cash flow problem that it was never able to recover.

4. Get proper overdraft protection. If you use your chequing account for business or realize that you may run into shortfalls from time to time, ask your bank to extend a small overdraft facility. You may need to have an amount on deposit to secure it.

Some banks may allow your cheques through without the official facility in place, but they usually charge very high penalty and interest fees for every day you’re overdrawn.

Once you put the proper structures in place to ensure that you’re in control of your account, you can be confident that your cheques will never bounce again.