Here is what bank statements are saying about your finances

A bank statement tells a lot about your finances. FILE 

By Isaiah Opiyo

In Summary

• They work to reinforce or explain your declarations on income, assets and liabilities.

I have received numerous comments from readers to shed light on what bank statements tell about one’s finances after the police vetting exercise where the panel enlisted use of bank statements.

A bank statement tells a lot about your finances, especially when it comes to financial probity. In most cases, a bank statement will work to reinforce or even explain the declarations you make on your income, assets and liabilities.

For instance, your sources of regular income such as salary and allowances must be reflected in the bank statements. Any discrepancies of the two may only signify some inaccuracies and require indepth explanation.

Study and understand your bank statements thoroughly before you can make any declarations regarding your income, assets and liabilities. Although not universally similar, a bank statement has five major columns: date, description, debit, credit and balance.

The following are some of the aspects that the columns may reveal about you:

Your sources of income

Any money that comes into your bank account be it from a cash deposit, salary income, dividend payment or a cheque deposit will be reflected in the credit column.

To verify or confirm the source of the income, you only need to read through the description column, which will give the name of your employer for salaries or the name of the drawer/depositor for cheques or cash deposits.

The size of your income

The size of your income can be traced from the amount of cash that appears under the credit column of your bank statement. The income may appear lower than your net salary due to other deductions such as loan repayments. However, unless you have other sources of income, the income flows should be regular and consistent.

Any huge amount of income that appears in your credit column that is not regular may attract some attention.

The value of your assets, unless obtained from other sources, must correspond closely to the amount of your cash inflows.

Frequency of your income

How regular your income is can as well be captured from the dates on your bank statement. An irregular income, for instance insurance compensation that you received several years ago, should not be declared as a source of income.

Regular incomes other than your monthly salary will certainly reveal that you are either on another gainful employment or you have other sources of incomes, perhaps a business venture.