Reading a Financial Statement 101


One of the first steps to managing and organizing your finances is to regularly read your bank statements. These documents contain important information regarding your money, so it’s important not to throw them in the trash or delete them from your email immediately.

Financial statements contain important information regarding your money, so it’s important not to throw them in the trash or delete them from your email immediately.Chris Bibey of the website MoneyCrashers.com says, “Learning how to read your bank statement is not as difficult as you may think. Once you know what you are looking for, you will feel much better about your finances.” Bibey offers the following important tips to learn how to read your financial statements:

  1. Begin by reading the summary. Near the top of your statement, you should find an overview of the activity over the past month, including opening and closing balances, deposits, and withdrawals. One brief glance at this information will give you an idea of your banking activity and whether there are any issues that need attention.
  2. Identify what type of statement you are reading. Checking account statements will reflect more money coming and going, whereas with savings accounts you want to identify how much interest you earned.
  3. Look out for mistakes. Keep a close eye out for errors; while they should happen rarely, if ever, you never know when you might get charged for something you didn’t buy or incur a fee you didn’t deserve.
  4. Learn how to find ways to save money. By regularly reviewing your statements, you will be able to spot spending patterns like getting a coffee every day on your way to work or making frequent purchases at your favorite store. Reduce these patterns and you’ll find you’ll have more money in your account.

“Understanding how to read a bank statement correctly can help you learn better money management and avoid careless mistakes, like overdrawing your account,” Mackenzie Maher from the website iGrad.com says. “You should carefully review your statement each time you receive one as it is the most opportune way to reconcile your own spending records with the banks.”

Many financial institutions offer a window of time in which you can report any errors or discrepancies. Once that time expires, the bank may not be obligated to investigate the problem.

 

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