To make sure you're on the same page as the bank. While your bank records all of your transactions and conveniently makes them viewable online, banks are not foolproof and neither are their records. If you balance your checkbook faithfully, you can make sure your records are consistent with the bank's and can prove otherwise if there is a problem or a mistake.
To keep track of how much money you have. This is perhaps the most important reason for balancing your checkbook. While you may have a general idea of the amount of money you have at any given time, purchases - especially small ones - add up, and it becomes easier to bounce checks if you don't know exactly how much money you have in your accounts. Bouncing checks or overdrawing your account can result in hefty fines, usually between $25 and $35 per transaction.
To help you budget. When you do your budget, it's helpful to go through your check register to see where you're spending your money and how much you're actually spending.

How to balance your checkbook
Balancing your checkbook is simple and doesn't require anything more than basic addition and subtraction skills. Here is a step-by-step guide of balancing your checkbook:
1. Record all checks. List all checks you've written in your checkbook register, organizing them by number.
2. Record all deposits. In the "credit" section of your register, list all of the deposits you make. Make sure you include automatic deposits, which are easy to forget.
3. Record all of your debit card purchases. The best way to do this, as with all debits (whether checks or debit card) is right when you swipe your card or write your check. If you can't do that, be sure to save your receipts.
4. Keep a running total of the amounts. This is easiest using a calculator, but make sure you keep a total of your credits and debits so you always know how much money you have in your account.

Helpful hints
Save all your receipts. Even if you faithfully record your debits and credits in your checkbook register, it's still a good idea to save your receipts in case you miss something or record it incorrectly. It's easy to transpose numbers, especially when you're in a hurry at the checkout, and saving receipts will make it easier to reconcile.
Balance your checkbook monthly. Most people find it easiest to balance their checkbooks on a monthly basis; others do it every pay period. Find a system that works for you, but don't make the mistake of trying to balance just once a year at tax time.

Balancing your checkbook may seem like a pain at first if you're just starting out or you're out of the habit, but faithfully recording and balancing your checkbook will help you to keep better track of your finances and avoid hefty overdraft fees.