You might be wondering, "Why should I bother looking at my bank statement every month?"
Well, here's the deal – managing our finances can sometimes be a bit tricky. You may need to review your bank statement for various reasons from tracking your spending habits to identifying errors and unauthorized transactions.
That's where personal finance awareness becomes super important. Being aware of our personal finances means keeping an eye on our money and making sure it's doing what we want it to do.
Checking our bank statement regularly is like putting on a pair of glasses – it helps us see clearly where our money is going, and it empowers us to make smarter choices.
Let's see the details about Why is it important to review your bank statement in excel online.
What does the term 'Bank Statement' mean?
A bank statement is a monthly document sent by your bank, summarizing all the activities in your bank account. This includes not only the money you've put in or taken out but also every little detail about how you've used your money and all transactions that have occurred via your account.
Here are the various categories of such transactions:
Every time you buy something, receive money or pay a bill, it's recorded as a transaction. So, this section is like the storyline of where your money has been and what it's been up to.
These are the moments when you add money to your account. It could be your paycheck, money from a friend, or even that birthday cash you got.
Contrary to deposits, withdrawals are when your money is taken outside your account. These are expenses you pay and the money you take out from your account to pay bills and other necessities.
These are the charges you might face for certain services, like using an ATM from another bank or if your account balance drops too low. Fees are the obstacles your money encounters, and understanding them helps you navigate your financial journey more wisely.
Why should you regularly check your monthly bank statement?
Finding Errors and Frauds
Reviewing your statement each month is crucial because it helps you catch any mistakes or suspicious activities before they turn into big problems. Here are some issues to be aware about:
1. Duplicate Transactions
Duplicate transactions are like sneaky clones of your purchases, showing up twice mostly through technical errors and taking more money than they should. By keeping an eye out for these duplicates, you make sure your money is not lost in an error.
2. Unauthorized Charges
These are transactions you didn't approve or recognize. It's like someone trying to use your money without your permission. By checking your bank statement, you make sure only the transactions you allow get through.
3. Incorrect Amounts
Sometimes the wrong amount may be charged to your account such as you spent $20, but your statement says $200. Checking for incorrect amounts ensures that the numbers on your statement match the reality of your spending, preventing any financial mix-ups.
Budgeting and Financial Awareness
When you review your bank statement regularly, you're essentially taking a close look at where your money is going. This information is gold when it comes to creating a budget. By understanding your spending habits through your bank statement, you can craft a budget that aligns with your financial goals and ensures that your money is working for you.
Identifying Spending Patterns
Spending patterns are the recurring habits that shape your money story. By examining your bank statement, you can spot where your money is spent most and prioritize your money accordingly. Identifying these patterns isn't about judgment; it's about understanding.
Planning Future Expenses
The spending history shown by older bank statements helps you predict where it might go in the future. For example, if you notice you spend a greater amount of money during a holiday, you can start planning and saving ahead of time. By using past statements to plan for future expenses, you ensure that you have sufficient money and responsible spending.
Detecting Suspicious activity
If you notice transactions or charges that you didn't make or if something seems out of place, it's crucial to inform the bank authorities immediately. Reporting these suspicious activities to your bank is like sounding the alarm – it helps protect not only your money but also the financial community from scammers and hackers.
Your bank statement is a digital document, and while it simplifies managing your money, it also requires an extra layer of awareness. Fake websites, online scams, and hackers may try to acquire your banking information and use your money without you noticing, the only way you can ensure that is to regularly check your bank statement.
It's not about making drastic changes overnight; it's about small, consistent actions that lead to big results. Start by creating a budget, setting spending limits, and tracking your expenses. Treat your bank statement as a guide, showing you where your money is going and helping you make intentional choices.