How to Calculate a Monthly Average Balance

Calculating average balances requires fairly simple calculations.
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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.

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