Bank statements are important

MOST of us file our bank statements away when we receive them, without even opening them. But, ignoring your bank statements could be costing you money and have you living under false perceptions of your financial position.

Instant notifications from your bank as you transact have become an efficient tool in monitoring daily spending, however, in order to remain on top of your finances you need to take a step back each month for a holistic view of how you have transacted.

It is important to not only assess the cheque account statements but to also pay attention to the credit card and savings account statements in order to make comparisons between spending, across the accounts, as well as saving.

Remember that different aspects of the statement will be important depending on which statement you are analysing.

For your everyday transacting account – your cheque account – the opening and closing balance is the most important aspect.

This is the account from which debit orders are paid and you need to pay attention and make sure that is a positive balance, so that debit orders are not returned as well as ensuring that they in fact are still presented on a monthly basis. However, when you are looking at your credit card or savings accounts statements, you need to pay attention to the interest received or paid.”

The general basics that all statements will indicate are: the main account holder details, the type of account held, a summary of your actions on the account, namely opening and closing balance, monthly deposits (credits) and withdrawals (debits), interest (charged or received) and bank fees.

As with all information, the true value lies in the interpretation.

I suggest that statements can prove valuable in the following ways:

Spending habits – There is no better way to determine your spending patterns than to analyse your bank statements. Create categories such as food and beverages, entertainment and so on. Then, based on a two- or three-month overview, calculate your average spent for each category.

A productive exercise is also to determine how many times a year you had large medical expenses or unforeseen circumstances in order to make a well informed decision about how much you need to have in your emergency savings account.

Analysing your spending habits will very quickly highlight in which areas you are living above your means and where you can cut down to put more funds towards saving or paying off debt. It is also the ideal foundation for drawing up a realistic budget that you can easily integrate into your life.

Making sure you don’t incur unnecessary costs, the analysis of a bank statement is an easy way to determine whether you are accruing unnecessary costs or whether you could potentially save on banking fees if you changed your banking behaviour.

Make sure you are up to date with your bank’s pricing as there are generally areas where one can cut back on costs. These include having your statements e-mailed to you instead of having printed copies delivered, using digital channels instead of drawing or depositing money inside a branch.

There are some months where the money spent on an branch withdrawal or deposit could have been the difference between being able to buy that something extra for the dinner table or not. Analyse your bank costs and do research about alternative ways of transacting – cellphone and App banking are often easy ways to cut back on banking fees.

Tracking debit orders – It is very easy to forget for which subscriptions we have signed up or which of our accounts are paid via debit order. Make sure that the correct debit orders and amounts are being debited every month.

If the amount that is debited is small you are unlikely to receive an instant message from FNB notifying you of the transaction and before you know it you could have paid hundreds of dollars for a service that you don’t use anymore or that you have forgotten about. You can only recognise and rectify this in a timely fashion if you check your statements often.

Important notices – Bank statements can be a rich source of bite-sized information.

None of us has the energy to read reams of communication but by just opening up your bank statements every month you could be gathering helpful tips and pieces of information such as interest rate changes, pricing changes, the latest card scams to be wary of and the precautions you can take to avoid them.

Remember that your bank will assume that all transactions on the statement are in order if they don’t hear from you within a certain period of time. Do your part and spend some time scrutinising your bank statements when you receive them – the benefits far outweigh the few minutes it will take to do so.

* Steve Coetzee is the acting head of FNB retail banking.