Reconcile often

If you’re old enough, you might remember having a paper checkbook register, in which you jotted down every check you wrote and kept a running balance. Once a month, when your bank statement came in the mail, you would reconcile your checkbook, which meant making sure that your running balance matched your bank balance, taking into account any outstanding checks or deposits. For me, that was always a dreaded task, but I felt so good when it was done.

In YNAB, you also have the opportunity to reconcile the balance of all your accounts, including your credit cards, with the actual balance at the bank. I still get the feeling of satisfaction when I reconcile, even though the process is much easier. Just click the Reconcile button in the account register and, when you confirm that your balances match, padlocks will magically replace the “cleared” symbol. And if you’re using the YNAB Toolkit, you’ll even get confetti!

Here’s a little movie of how that looks:

If your balances don’t match, you have to do a little investigating to see where the problem might lie. In my experience it’s usually a duplicated entry, often because I approved a Pending transaction that didn’t match the actual transaction when it came through. That usually happens on restaurant transactions involving tips. The original transaction didn’t include the tip, but the final transaction did, so they don’t match and that transaction is duplicated (and too much money is deducted from the account balance).

If you have a discrepancy that you can’t find, YNAB can make a reconciliation adjustment for you. And that’s fine, especially for small amounts. But I do suggest making a bit of an effort to find the problem. To make it easier, here’s a hot tip I learned in high school accounting class: If the sum of the digits of the number by which you’re off is a multiple of 9, the problem might be that two numbers were transposed.

The beauty of reconciling is that if you do find a discrepancy, you only have to look as far back as the first padlock for the error, because you know that the padlocked transactions are okay. That’s hugely helpful.

That’s why I suggest you reconcile at least weekly, more often if you have lots of transactions. I try to I do it at least every couple of days. 

If it’s been awhile since you reconciled your accounts, I encourage you to do it today!

P.S. If you need some step-by-step guidance on how to reconcile, this Heard It From Hannah video is incredibly thorough!