Bank account balances can change almost constantly as you spend and earn money and transfer funds. The balance at a given moment doesn't always offer an accurate picture of an account. Average balances can give a more accurate measure of its typical worth over a given period.
Simple Average Balance
Step 1
Record the account's balance at the beginning of the period in question.
Step 2
Record the balance at the end of the period.
Step 3
Add the values from steps 1 and 2 and divide by 2. The result is the simple average balance for the period.
Daily Weighted Average Balance
Step 1
Record your account balance each day of the month.
Step 2
Add up the daily balances recorded in step 1.
Step 3
Divide the result of step 2 by the number of days in the month. The result is the average balance for the month, weighted by your daily account balance. A daily weighted average provides a more accurate estimate of your typical account balance for a month than the simple average.
Monthly Weighted Average Balance for a Year
Step 1
Record your account balance at the end of the each month of a year.
Step 2
Add up the values you recorded in step 1.
Step 3
Divide the result of step 2 by 12. The result is the average balance of the account for the year, weighted by month.