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Economics is not a distant science; it is present in the decisions we make every day, whether deciding between cooking at home or ordering a delivery, or even choosing to make a purchase in installments or save for the future. In recent months, two economic factors have directly influenced Brazilians’ pockets: the record exchange rate of the dollar and the high interest rate. But, beyond the figures and indicators, what does this mean in our daily lives? And, more importantly, how does our brain respond to these economic changes?
The dollar at R$6.00 is not just news for investors. It directly affects the price of products we consume. From the coffee we drink in the morning – with imported inputs, such as fertilizers – to the cell phone we buy for work or leisure, the cost in dollars influences the final price in Brazil.
The exchange rate is a direct reflection of confidence (or lack thereof) in the country. When foreign investors believe that there is instability in an economy – whether due to political, fiscal or regulatory uncertainties – they tend to withdraw resources or avoid new investments. This outflow of dollars puts pressure on the American currency upwards.
In Brazil, factors such as fiscal uncertainty (with doubts about controlling the public deficit), changes in the rules of the fiscal framework and the perception of political instability have generated fears. These factors fuel investors’ fears that the country will not be able to deliver a scenario of stability and sustainable growth. In short, investors prefer to look for safer markets, even if they offer lower returns, such as the United States or European countries.
With fewer dollars entering Brazil, the supply of the currency decreases, while demand (especially for imports and payments on external debts) remains high, causing the price of the dollar to soar.
The interest rate in Brazil (also known as the Selic rate), which is among the highest in the world, affects both those who take loans and those who invest. On the one hand, it may seem advantageous to leave the money in savings or fixed income investments, which will yield more. However, for the majority of Brazilians who depend on credit to purchase durable goods or finance their debts, the scenario is alarming.
Imagine you need to finance a car. With the high interest rate, the final amount paid to the bank can be almost double the price of the vehicle. The same happens with real estate financing, installment payments on credit cards and personal loans. This reduces purchasing power, leaving families more indebted and inhibiting consumption.
How to make more informed financial decisions?
In times of economic volatility, small changes in behavior can make a big difference. Here are some practical strategies for navigating this economic storm:
- Reevaluate priorities: Make a list of your expenses and identify what is essential and what can be reduced. For example, swapping your premium streaming package for a basic one or adjusting your eating habits to cook more at home.
- Avoid expensive credit: avoid financing and installments with high interest rates. If possible, prefer to pay in cash or postpone the purchase.
- Plan financial goals: Use tools like spreadsheets or apps to organize your budget. Set small goals, such as saving a fixed percentage of your income each month.
- Invest in your emotional health: Financial anxiety is real and can lead to impulsive decisions. Activities such as meditation, physical exercise or even talking to a behavioral finance expert can help.
- Family financial education: Include everyone in the house in budget conversations. Explain, in a didactic way, how the rise in the dollar and interest rates impacts the home. This can create a culture of shared responsibility.
Opportunities amid the crisis
No matter how challenging the scenario may seem, it is important to remember that every crisis brings lessons and opportunities. The rise in the dollar can be an incentive to explore local alternatives, valuing national producers. The high interest rate reinforces the importance of building an emergency reserve, taking advantage of the higher yields from fixed income.
As a behavioral financial planner, my invitation is that you view these challenges as a chance to reevaluate habits and build a healthier relationship with money. After all, economics is not just about numbers; it reflects, above all, our choices and priorities.a
