A budget is in place, ensuring that the monthly spending plan does not exceed the monthly income, but that does not account for fluctuations within the month. This is called CASH-FLOW. Over the course of a month, X is expected to come in and Y is planned to go out, but how much comes in and goes out on a weekly basis?
In order to stay on top of this question, your child needs to know how to balance a checkbook (an excel spreadsheet, utilize a software or an app). In today’s world there are many options on how to keep track of money, and once your child is launched into adulthood and utilizes a bank account with a credit or debit card, it will be imperative that she know how to track her money not only monthly, but weekly and day to day. Otherwise that rent check may bounce, incurring a rather high fee, because the grocery purchase put her bank balance too low to cover it.
Balancing the checkbook
Like the latter steps in teaching your child to 
budget, these steps may be theoretical. If your child doesn’t have a steady income of some kind, not matter what size, nor consistent expenses, there may be little need to balance a checkbook (especially if all purchases are done in cash). But this is a necessary skill, and along with that mock budget you and your teen worked on, you can extend those figure to a mock checkbook scenario.
The idea behind balancing a checkbook is to ensure that every debit from a bank account is accounted for and that the actual balance of that bank account matches the balance one expects.
Once upon a time, all transactions were either done in cash or by writing a check, hence balancing a checkbook. Some young people these days do not even have a checkbook because they use a card for purchases and auto pay their bills. Because of this, I will not go through the mechanics of manually balancing a checkbook, but rather give you some technological alternatives.
There is nothing wrong with good old paper and pencil, and if you have a teen that is bent towards “the old fashion way,” by all means, walk them through how that looks. However, since most teens are computer savvy, lean towards technology and since there are numerous tools that may this process far simpler, I will focus your attention to those avenues.
One option is using an Excel spreadsheet.
If you opted for an Excel spreadsheet to track spending, that same spreadsheet can be used for balancing the checkbook (is it still considered a checkbook if you aren’t actually using a checkbook? Hmm. I’ll have to look into that). You can use that spreadsheet for balancing your bank account info.
It’s as simple as this:
| Date | Method | Description | Debit | Credit | Balance | Category | Cleared |
| $ | $ | $ | |||||
Start with the current bank balance. Put that under balance on the first line.
Date – of transaction
Method – either of payment or source of income (use abbreviations where possible)
DC – debit card
CC – credit card
WD – bank withdrawal
AD – automatic draft (if bills are payed via a bill pay feature through the bank or on auto draft from the service provider)
#XXX – for the good old fashion check. Simply record the check number
INC – if the money is income
Description – What was purchased? Where? Why? It may be necessary to answer all three questions, or just one. Whatever information is helpful and necessary to keep track. If the transaction is income, record the source of that income (if your teen has more than one source of income, specify which one)
Debit / Credit – If the transaction is taking money out of the bank account, record it under Debit. If the transaction is putting money into the account, record it under Credit.
Balance – Break out the math skills and let’s do some calculating. If the transaction is a debit, take the balance from the line above and subtract the transaction amount. If the transaction is a credit, take the balance from the line above and add the transaction amount.
Debit = Subtraction
Credit = Addition
In Excel, you create a formula to let the program do this calculation for you.
Cleared – This spreadsheet is your manual input of data. Once that transaction appears on your bank statement, you can check off the cleared box, indicating that your records and the bank records are synced.
The beauty of the internet and Excel is that you do not have to wait for the end of the month when a printed bank statement is received. This process of data input and confirming within the bank account can be done weekly, even daily. Given the technology around us, there is no reason that your teen cannot stay on top of her bank balance at all times.
Excel is the lowest tech of the high tech options.
Beyond that there are some paid and some free resources that provide further benefit. Every situation is different and different people have different needs, so I merely provide you here with possible resources: you and your teen do the research to determine the best option, if something beyond Excel is desired.
This is not an exhaustive list, by any means, but the ones I find most notable. If you are familiar with others, please let me know so I can pass that information on!
100% Free
Mint.com – This is my favorite. Can be used on the website or on the app. Allows budgets to be created, links to bank account, credit card, and debit card. It tracks spending, sending reports via email. Makes it very easy to track spending overall and within spending categories.
Kinda Free (has a free version and a paid “premium” version
YNAB – Stands for You Need A Budget. This is in the Kinda Free category because it is a paid program, but they offer it free for college students. As a result, this may be worth checking out for your teen, almost college student. It seems to me this one has many of the same features as Mint. The cost is only $5, and whatever advanced features they offer may be worth that $5 for some.
Mvelopes – The pricing structure of this service has changed since I used it a few years ago,, but the service was worth every penny of the subscription fee to me at that time. Hopefully your teen is not working on paying off debt, but you might be, and so I wanted to mention this one here. At a time when I had multiple credit cards, and was paying off debt from multiple angles, this program was so very helpful in keeping all of that organized and maximizing my ability to pay off the debt as fast as possible. But, aside from debt issues, I find the free options sufficient.
There are many more options out there. While I find too many options unhelpful, you may thrive with multiple option to choose from. MoneySavingPro will give you a review on 10 different budgeting tools, including Mint and Mvelopes.
Whichever one you and your teen prefers, make the most of these tools.
Some are asking what do I use?
I use a combination of an Excel spreadsheet and the app Mint. I like free things, and both Mint and Excel are free. I have no debt, so I do not need some of the advanced features enabling one to track their debt and speed up the process to pay off that debt. I also do not have any credit cards, so I do not need a feature for that. I pay for most things in cash, which are distributed to spending envelopes, and use my debit card when cash isn’t possible (like Amazon purchases, for example), so that money is immediately taken from my bank account and enables immediate accounting of that spending.