Reading your bank statement can offer clarity in your personal finance.
It is not just a piece of paper that you skim at only to find out your current balance and throw it in the bin.
Having a bank statement is pretty much like having a copy of a documented medical history. It can give you detailed information about your spending habits, spot potential problems and show a record of your financial soundness when applying for a loan from a clementi money lender.
What exactly is a bank statement?
A bank statement shows all the records of your transactions over a certain period in your transaction history. It will read the record of your transactions from a checking or savings account.
A bank statement shows all the records of your transactions over a certain period in your transaction history. It will read the record of your transactions from a checking or savings account.
It is issued every month by your bank, or you can access it online – which helps you to keep an eye on your transactions for the past month. Normally, bank statements give you the history of your account activity from the past 30 days.
The anatomy of a bank statement
If you have never seen your bank statement, reading it might feel like translating a Cuneiform script.
It will be easier to read a bank statement if you learn what each part means. Here are the most important parts of a bank statement:
Starting Balance – This is the amount that can be found at the beginning of the statement. Before any deposits or withdrawals made in your account, this is the balance that will show on your account.
Ending Balance – This is the amount that can be found at the end of the bank statement. If you make more transactions such as sending or spending money, you will see a lower balance at the end of the statement.
Deposits -Any installment of funds made into your account is called deposits. This can be from a salary that is deposited in your account, cashed checks, or fund transfers.
Withdrawals – This part of the bank statement shows the details of the money that you withdrew from your account. This can be from funds you transfer or payments you made to your credit card and transactions on your debit card.
Interest – Your bank statement will show the interest you’ve earned over time. If you have multiple savings accounts in one umbrella, the bank statement will show the total interest earned for all accounts.
Fees – This part shows you the fees you paid during the statement period. These are fees from ATM withdrawals and monthly maintenance fees. If you use your debit card overseas, then you will be charged with foreign transaction fees that will reflect your account.
Statement Period – This is the part of your bank statement that says “for the period: date or “statement ending”. For example, the statement is generated on June 10th and covers May 9th to June 9th.
How to properly use your bank statement
Now you know the different parts of a bank statement and how to read it.
Let us share with you how you can use your bank statement to manage your personal finance.
For reconciling your account
There could be a part of your childhood when you remember your parents talking seriously on the dining table with their checkbook and other documents. They were most likely evaluating their transactions and reconciling their accounts to manage your family’s cash flow and savings
Keep an eye on your spending
Your bank statement is a useful document to track the money that you spend. Tracking your spending is the most important task in managing your finances especially in planning your monthly budget.
Spot fraudulent transactions and errors
Your bank statement reflects all the transactions you made on your account – even the fraudulent ones. Sometimes, you will find discrepancies in the transactions. If this happens, report it to your bank before it escalates to more serious problems
Keep a record of your finances
In case you decide to apply for a loan, bank statements are required. It is important that you have documented your finances because you may need to show it to prove you are worthy of a loan.
Your bank statement is one of the most important documents you can have to understand to help you achieve your financial goals.
As your bank statement shows up on your mail or email, make it your goal to include it in your monthly reading list, use it properly in tracking your spending and creating a budget so you can be financially-savvy and achieve your financial goals.
Your hard-earned money is very important so you have to monitor where your money goes to achieve financial success.