According to a survey by the Credit Protection Service (SPC Brazil), released in March this year, savings accounts are the preferred option of 61% of Brazilians when it comes to saving extra money. The favoritism lies in the fact that there is no Income Tax discount, the ease of making applications, and especially the convenience of redeeming money whenever you want. In addition to being a simple and low risk option, savings cover all profiles, from small savers like us, students, to large investors.
Yes, students. Do you usually keep a portion of the money from your internship for an emergency? Not yet? Thinking of helping you, Her Campus talked to the writer and financial planner Eliane Metzner, who explained the initial steps and even how to organize yourself to buy that car or make that long dreamed trip.
Credits: Travel Latina
Her Campus (HC): How can someone open a savings account?
Eliane Metzner (EM): Look for a financial institution and take essential documents, such as RG, CPF, proof of address – in your name or, if you live with someone, the document need to be in their name. If you are a minor, the ideal is to take RG and CPF of the legal representative, as they are the ones who will sign the account opening. Proof of income is also required.
HC: Is there a minimum amount to open/deposit?
EM: The initial amount depends on each bank or credit union, in some places it’s R$ 20, R$ 100, R$ 200 or even R$ 500. The next deposits can be of any value.
HC: How does the yield works?
EM: The yield had a simple way to be calculated, but it changed in 2012. Now, it works like this:
The Central Bank has a Monetary Policy Committee (COPOM), which analyzes inflation (raising prices) and sets a target for the interest rate. Banks use this goal as a benchmark in their loans and applications. If interest rates are low, people save less and take more loans, buy more, and inflation rises. If interest rates are high, instead of spending or borrowing, people are saving. They are saving their money, and then inflation falls.
What does this have to do with saving income? If this rate, called the Selic target, is above 8,50% per year, savings income is 0,50% per month + the TR (or 6.167% per year + TR).
If the Selic target is equal to or below 8,50%, the savings yield 70% of the Selic target + the TR, which is a monetary correction, lately almost zero. If you think it confusing and want to make it easy, go to www.bcb.gov.br and see on the right side, this calculation appears ready. Remember that savings don’t have Income Tax for the individual savers.
HC: Who chooses to invest in savings is actually doing something low risk? Why?
EM: Savings accounts are regulated by the Central Bank, and as a product of funding, if the bank breaks down, it has a Credit Guarantee Fund, up to the amount of R$ 250 thousand per CPF. This gives security to the saver. And because it’s a conservative product, it doesn’t have the risk of negative oscillations, as it will yield the combination every month.
HC: Experts say the ideal is to separate 10% of our income for savings. However, internships usually do not pay very well. How do you measure this percentage?
EM: The important thing is to save a part. If it doesn’t give the 10%, stipulate a value to create the habit, for example R$ 20 or R$ 50 a month. Make some changes, for example, take a snack from home once or twice a week, and set aside this saved amount for your investment. Some trainees still live with their parents, and because they have fewer fixed bills, they are able to make important choices for their goals, exchanging common expenses for keeping it.
Credits: 401kcalculator.org
HC: What method do you recommend to manage money efficiently?
EM: The ideal is to already separate a value to save when you receive the income, put the rest in envelopes and allocate to the larger accounts. For day-to-day accounts, you can use an application, such as “Minhas Economias”, “Guia Bolso”, etc., or a booklet. This year I launched the “Money Book”, a personal finance control booklet, that can be useful for you.
But what makes a difference in financial management is knowing where the money goes, regardless if you organize it with a notebook, calendar, spreadsheet or app. The important thing is to do it.
HC: Is the emergency fund worth for students or it fits the family more?
EM: You must think: if you have an emergency, what will happen? Do you have someone who helps you or is this fund important? Unemployment, emergency, a travel opportunity. Beyond this question, the most important is to create the habit. If from the beginning of the career you get used to putting together a little and having a fund for emergencies, this will become a lifelong habit. It is early in the career that people decide, through their habits, whether they will be investors or debtors.
HC: What is the biggest risk of investing in savings? And how can we reduce it?
EM: The risk of investing in savings is not looking at other market options. The tip is: save. Having money, you can look for other options such as government bonds, mutual funds or stocks. The good of the savings account is that it has no cost, it is practical and has in virtually all banks.
HC: What are the advantages of saving on a monthly basis?
EM: The advantage is to create the habit of saving and watching the money grow. In my blog www.financasnapratica.com you can find a spreadsheet tab an application simulator, where you put the monthly amount and simulate how much you will have in the future, or find out the monthly value you need to conquer your dreams.
HC: Are there other forms of investment complementary to savings? Which are they?
EM: When opening your account, talk to your manager or consultant about investment options and negotiation costs. It’s no use going for a product that yields more, if the difference in yield goes all in costs. You have to do an analysis on both sides. A product that has very low cost, high liquidity and a good income are federal public securities, starting at R$ 30. To negotiate, you must have a checking account, there you have to see the costs. There are very attractive investment funds too, so investing usually requires a little higher value, so join in the savings and follow.
Next month is already here. How about start saving?