Today it’s much easier to ignore the letters you get from the bank on a regular basis. If you still receive physical mail, you likely file letters from your bank away in a pile, resolving to look at your income and expenses at a later date – perhaps as a big budgeting evening. Unfortunately, those days when you want to check your statement almost never come.
The majority of us don’t even receive letters anymore. As companies in the financial industry are trying to cut down on paper usage, electronic statements and online banking are becoming more common. You may even go months without checking on your balance. While staring at your money might not fill you with a sense of joy if you know you don’t have much in your savings, avoiding your bank statement can be one of the worst things you can do for your financial health. Here’s why you should start reading your statements again.
Visibility is Crucial to Good Budgeting
If you understand the four pillars of financial education for consumers, you understand that visibility is the key to overall financial health. The first and most important reason why you should be reading your bank statements on a regular basis is they give you an insight into the ongoing and outgoing expenses in your life. Only when you have this crucial information can you create an accurate budget.
Your budget, while it might seem restrictive at first, is actually there to protect your finances and ensure you’re only spending the money you can afford to lose. Without a good budget and an overview of your finances, you could risk constantly getting into debt. Your bank statement can even show you if your budgeting strategies are working by giving you an insight into whether you’re reaching your saving goals.
Your Bank Statements Will Help You Save Money
Crucially, reading your bank statements also makes it easier to highlight where you can save money. You’ll get an instant overview of where the majority of your cash is going, so you can make intelligent decisions about where and how to cut costs. You might notice you’re spending way too much money on paying off the interest for an old student loan. However, with a student loan refinance, you can minimize your monthly expenses and put more of your cash into your emergency fund for a rainy day.
You’ll also come face-to-face with some of your bad spending habits. While it can be embarrassing to look at your monthly statement and recognize how much you’re actually spending on fast food and other unnecessary expenses, it can also be a powerful wake-up call when you need it most. Seeing where you’re most likely to overspend will help you to put strategies in place to reduce your chances of breaking your budget in these areas.
Don’t Underestimate Your Bank Statement.
While a bank statement might not seem like the most exciting piece of mail you can receive (digitally or otherwise), learning how to read it regularly could be a crucial step in achieving true financial independence and good financial health, next time you receive a bank statement, make sure you make the most of it.
