Whether you have a checking or savings account, you can guarantee you will receive a bank statement. Statements are provided either via mail or online, depending on your bank and your individual preferences. Typically, you can set these preferences using your online banking app or speaking with an advisor at your bank or credit union.
Depending on your bank’s schedule, you can expect to receive your bank statement on either a monthly or quarterly basis. Once you’ve received your bank statement, you can anticipate a lot of information related to your financial decisions over a period of time. At first glance, all of this information can be overwhelming, or possibly confusing. However, once you have an idea of how to properly read and evaluate your bank statement, you will find it to be an inherently useful tool in your personal financial planning and path to success.
When evaluating your bank statement, there are multiple areas to pay attention to get the full scope of your account activity. You will find important information related to your transactions, deposits and fees you may have been charged for during that period. Regardless of whether this is your first bank account or not, it is important to understand the objective of a bank statement and how to read it thoroughly.
What is a bank statement?
A bank statement summarizes your financial activity for a standard period of time. The statement holds critical details regarding activity related to your account, including all your deposits, withdrawals, and transfers. You can also expect to find your beginning and ending balances for the period the statement covers. This can be useful for balancing your checkbook, or planning out future purchases. Along with these pieces of information, your statement contains contact information for your bank. Think of your bank statement as a snapshot of your transactions and bank history for a given period – it gives you a full look into all your banking activity during that time.
When you read your bank statement, there are multiple areas you will want to pay attention to. Aside from your outlined transactions, your bank statement will contain information related to your personal information, your statement period dates, any fees you may have been charged for, and depending on the account, your interested earned in that period. If you have more than one account with the bank sending your statement, it is likely you will find your various accounts’ activities in one statement to give you a full view of your finances.
Because of the personal information included in your bank statement, it is important to keep any copies in a safe place. If you receive physical copies of your bank statement, you want to ensure you are filing them away in your home securely. This will help to protect your financial privacy and details about your account.
When using online banking through the bank you have an account open, you can usually opt for virtual bank statements to be uploaded to your online banking account each period. This can be a more secure and convenient way for you to keep track of all your bank statements, and easily reference any if needed. It is important to hold on to your bank statements for at least one full calendar year. You can be confident that your bank will keep record of your bank statements for at least five years, though many choose to hold onto statements for much longer.
What is the purpose of a bank statement?
Now that you know what is included in your statement, understanding the details of it can help you review your spending habits and develop strategies to manage your finances. Comparing bank statements each period will give you an idea of what you spend on average, and where you are spending the majority of your money. This is a good way to evaluate your spending habits and determine ways you can save money more effectively and spend your money more efficiently.
Your statement can also let you know if you are responsible for any recurring fees, such as overdraft fees. When you overdraft from your account, you are spending more money than what is currently available in your account. This can cause you be charged an overdraft fee determined by your bank or credit union. If you continue to overdraft your account, you can expect to be charged a fee for each overdraft, depending on your account’s requirements.
Because some transactions take a while to clear in your bank account, it’s important to keep track of outstanding payments to get a more accurate reflection of the money in your account. If you find yourself incurring overdraft fees often, evaluating your bank statement may help you understand how much money you need to maintain in your account to avoid overdraft fees in the future.
In addition to understanding the full details of your bank account, reading your statement can help you to determine any mistakes you may see on your bank statement. While mistakes are extremely uncommon, there are circumstances where you may encounter an issue. Using the contact information provided on your statement can help you get in touch with a representative immediately to reconcile any issues that may arise. Before you contact your bank, do your best to verify whether or not there is an actual mistake, and an advisor will be able to guide you through the process of fixing it and outline any actions you may need to take.
Leveraging Your Bank Statement for Financial Success
Your bank statement gives you a ton of critical information related to your transaction history, spending habits and insight into your overall account activity. Evaluating your bank statements on a regular basis provides the opportunity to review your spending habits objectively and see where much of your money is going each period. This can help you more accurately track your spending and develop saving habits while taking your spending into consideration. Leveraging your bank statement to aid in your financial planning can help you achieve financial success.
