Saying “finance” and “quantum physics” is almost the same for the vast majority of the population: both appear as complex disciplines, difficult to understand, virtually inaccessible.
But in the first case, the opacity of the subject “personal finance” is the product of prejudice. Comfort dominates many people, who prefer to delegate decisions about their money or directly squander it rather than understanding the rules that can facilitate the path to financial independence or, at least, to a life with more free time.
In this era of adjustments and skinny cows, what better way to aim against traditional banking, one of the sectors most resisted by people, but to which they are subjected due to ignorance or lack of action. We will do this by pointing out three financial costs that can be avoided in order to generate interesting savings for the devalued pockets.
1) Cost for maintenance account and undue charges
There are two types of bank costs that we can eliminate: avoidable and improper.
As avoidable costs, we mention the account maintenance and the cash withdrawal charge via ATM. The first is part of the usual practices of banks, although at present and thanks to the appearance of fintech it became an avoidable cost since we can easily open an account in digital banks that do not incur this type of behavior against their own customers.
As regards the cash withdrawal charge at ATMs, there are few entities that debit a charge from their customers’ accounts when money is received at ATMs in another network (Banelco or RedLink) or in the same network but from another bank. To avoid this charge, which can reach 50 pesos per withdrawal, it is always necessary to withdraw money from ATMs of the same network located in a branch of the bank where you have an account.
With regard to undue charges, we can highlight items such as “collection management”, “reserve of funds” or “deferral of payments”, which in most cases have no reason to be and that are the reason for hundreds of claims in the Consumer Defense offices. Namely: any bank commission that does not meet the following requirements is unduly perceived:
- Originate at a real, direct and demonstrable cost (they must be for something real).
- Be duly justified from a technical and economic point of view (you cannot charge any price for a service).
- It must be for the effective provision of a service that has been previously requested, agreed and/or authorized by the user (commissions cannot appear out of anywhere).
2) Excessive costs in transfers abroad
The stocks were repealed more than three years ago and, however, transferring money abroad from a bank branch remains a headache both for the operational and bureaucratic obstacles imposed by traditional entities and for the fees they charge, often disparate and meaningless
How can these costs be lowered? The possibilities are two, depending on the reason for the transfer.
- a) If the idea is to invest the money in foreign financial assets, the capital can be transferred from a local broker without turning money but shares. It is relatively straightforward: shares of companies that are listed both on the local Stock Exchange and in New York are bought in the form of ADRs (American Depositary Receipt, as the Argentine shares that have their mirror on Wall Street, are called) and transferred to a open account in a US entity The same operation can be carried out with national or provincial bonds that operate abroad. Once the bonds or shares have been deposited in the foreign account, they can be sold and converted into dollars. This was the window that thousands of savers found to avoid the financial yard of 2001.
- b) If the transfer is for payments of any kind, there is a novel mechanism offered by the new exchanges (exchange houses) of bitcoins and crypto assets: the person or company can turn their money abroad using cryptocurrencies, but without running the risk of variation price during the operation (the exchange deals with closing the sale transaction beforehand). This detail is important because, otherwise, the market volatility of this type of assets could end up liquefying part of the money or increasing it, when the saver’s wish is to set the amount to be transferred.
3) Inflation tax on current expenses forecast
This is not a commission charged by banks but a social cost that we are unfortunately used to face for a long time in Argentina. Inflation, we know, evaporates the purchasing power of our money when it is in pesos. What changed so that we now manage with some peace of mind? Fintech began to offer what I call “instant monetization”: they pay high interest for the balances insight, that money that we have on hand in the account and that we use for daily expenses.
The banks, on the other hand, do not reward us for what we leave in the savings account, although the majority offer us (commission through) to invest in money market common funds, which generally allow withdrawing all or part of the money invested in the day.
Consequently, if we transfer the money destined to current expenses to one of the fintech that offer us interests without forcing us to think how, where, how much and until what date to invest it, we will have capital working for us until the precise moment in which we should spend it. What’s more, some fintech today provides performance rates in line with expected inflation. This is a new financial technological tool that, we estimate, will be in common use in the coming years.
Saving money by generating a surplus between income and monthly expenses is a traditional saving to which we must aim, but we will not be really efficient if we do not eliminate avoidable or unnecessary expenses before.
That is first-order savings and behavior to follow in the different areas of daily life in the current explosive context of rising prices and low economic activity.
The message is clear: if we don’t take care of protecting our money, nobody else is going to do it. Today, more than ever, we must train and inform ourselves to find creative solutions that help us on this path towards financial independence and the enjoyment of free time.