Understanding the Process of Evaluating Your Statement of Account.

Statement of Account - Title Image

Introduction 

Have you ever received a paycheck or a sum of money from work, only to feel a few days or weeks later that you can’t account for your spending? You might think your bank deducted cash and be unable to reconcile your expenses with your income. After reviewing your transaction history or statement, you realise you were responsible for all the unaccounted spending.

Your statement of account or a bank statement offers the perfect financial diagnostics. It’s like having a health report for your account, empowering you to take control of your financial health. 

The statement above is not an overemphasis at all; in fact, this is how successful companies and organisations have stayed afloat. They have been able to do so by constantly monitoring their account statements to ensure that they are always in profit

What is a bank statement of account? 

A bank statement of account, often referred to as a bank statement, is a monthly financial document prepared by your bank that shows the financial activity of a bank account holder for that period. Even though most banks prepare their statement at the end of the month, customers can request their statement of account through online banking or go to the bank to obtain a printed copy if they need it at any point in time. 

Statement of Account - Review

Image by pressfoto on Freepik

In summary, your account statement is healthy or tends towards healthy if, after evaluating your opening balance, deposit and withdrawal, you are not in zero. 

The analogy above does not perfectly describe your financial health, but it shows you that at the end of the month, you probably could not account for any left which could be put into savings or investments. 

Cash Inflow and Outflow

The focus of this blog post is on your personal cash flow, which is essentially the money coming into and going out of your account. By tracking your expenses(cash outflow) and ensuring they don’t exceed your income(cash inflow), you can maintain a healthy financial balance.

A typical cash inflow will reflect the following:

Anything that brings cash into your account will often fall into the side of your cash inflow. It could be some money gotten from your small side hustle or a cash gift in that month.

A typical cash outflow will reflect the following: 

  • House Rent Payment/ Mortgage Payment
  • Utility fees
  • Groceries
  • Gas fees
  • Transportation
  • T.V Subscription/ Netflix
  • Entertainments

One of the key benefits of evaluating your cash flow is that it allows you to understand your net cash flow. This is the amount of money you have left after subtracting your expenses from your income. A positive net cash flow indicates that you have money left over, while a negative net cash flow means you’re spending more than you’re earning. By regularly evaluating your cash flow, you can identify areas where you can cut back on expenses or increase your income, leading to better financial health. 

CASH INFLOW AND OUTFLOW Image by our-team on Freepik

Bank Statement and Proper budgeting

A budget is a powerful tool in personal finance management. It helps you plan your spending, which is often one of the most challenging aspects of managing your finances. With a budget, you can identify and eliminate unnecessary expenses, prioritise your financial goals, and avoid overspending. Impulse buying is a common cause of financial mismanagement, and a budget can help you curb this habit. 

There are times when you need help precisely identifying the loopholes in your purse and what is taking the money you are supposed to be saving and investing. However, by properly analysing your bank statement, you can quickly identify the loopholes in your purse and promptly mend them by budgeting your income.

There is a golden rule from the book Richest Man in Babylon: At least ten percent of your income is yours to keep. 

Your statement account shows you the part of your expenditures that is in excess, and with that, you can even calculate how to manage your income. If the only solution is to work extra hours to make enough to diversify, your bank’s statement will reveal that to you quickly. The point remains that accessing your bank statement can be the first step towards the financial breakthrough you have always desired, filling you with hope and motivation. 

Final Note: Vital Information on Security

Many people need to realise that we are in a world that is getting tech-driven every day, and because of this, scammers are developing many techniques to hack your account and steal some dollars daily. 

Regularly accessing your bank statement is not just about financial health, it’s also about security. It helps you trace any deduction from your bank account that you did not initiate, ensuring your financial safety. 

One common type of deduction that often goes unnoticed is subscriptions to software and applications. Many people, in a bid to test an app or software or use a trial version of their favourite app, have their cards set up for automatic deduction. They may not remember or realise the cumulative cost of these subscriptions, leading to unexpected deductions from their account. By regularly reviewing your bank statement, you can identify and manage these subscriptions, ensuring you’re only paying for what you need.

Your money is the result of your labour, so you want to ensure that you can account for every bit of it, and your bank statement is the first step in securing and accounting for your money. 

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3 Comments

  1. “What an insightful post! I really appreciate the depth of information and the clarity with which you presented it. Your expertise on this topic is truly impressive, and I’ve learned a lot from reading this. Thank you for sharing your knowledge!”
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  2. This article on the importance of a statement of account as a financial health check is insightful! It highlights how regular reviews can help manage finances effectively and ensure long-term stability. A must-read for anyone keen on financial well-being! Best School in Tirupati

  3. Evaluating the bank statement turns out to be actually important

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