Growing up, I watched my parents maintain their checkbook ledger quite carefully, though it was easy for them: they only wrote checks or (on a rare occasion) made a counter withdrawal from their checking account, and they also would manually go to the bank and make deposits of any paychecks they received.
Today, I still write and receive checks, but I also do some ATM withdrawals, some check card purchases, and some automatic withdrawals as well. These new transaction types have made money management easier in some ways (it’s much easier to get at my money when I need it and in some ways it’s easier to budget) and harder in others (the old paper ledger doesn’t cut it).
Rather than sticking with a paper ledger, which would make it very difficult to keep track of all of these different transaction types, I’ve moved the whole thing to Microsoft Excel. Essentially, it works like a traditional ledger, with a check number column, a memo column, a credit column, a debit column, a “type of transaction” column, and a continuous balance column (just a formula that automatically adds the new debit and subtracts the new credit from the balance of the previous row).
Whenever I pay bills, I just enter them right into Excel. Whenever I’m out and about and I make purchases, I save the receipts and enter them in Excel when I get home. Whenever I make an electronic payment, I immediatly make an entry into Excel. In short, a spreadsheet has become my replacement for a checkbook ledger.
At first, I had trouble with automatic deductions and deposits. They would come at various points in the month and if I forgot to enter one on the right day, my balances would get out of whack. I finally hit upon a solution that I call the “better safe than sorry” solution: at the start of each month, I enter all my automatic withdrawals for the month, and at the end of the month, I enter all of my automatic deposits for the month. Using this method (along with making sure my balance in Excel stays above zero), I am able to be sure that I won’t overdraft in a given month.
I’ve found that this system works great for me. What system works well for you?