How the US-Iran War Affects Your Wallet: Understand Now

What happened?

According to G1, the recent war between the United States and Iran left a trail of destruction in the global economy. The conflict, which lasted almost four months, resulted in a significant disruption in the flow of oil in the Strait of Hormuz, a crucial point for the movement of 20% of the world's oil. This interruption caused oil prices to soar from around $70 to nearly $120 a barrel, creating a real shock in the market.

The effects of this increase didn't take long to reach the end consumer, with fuel prices skyrocketing and inflation intensifying, particularly in the US and Brazil. The result? A direct impact on your wallet and your personal finances.

Why does this matter?

The economy is a complex web, where every event can have a domino effect. The rise in oil prices affects not only fuels but also the cost of transportation, agricultural production, and everyday products. When fuel prices rise, everything that depends on them becomes more expensive — including the food you buy at the market and the services you use.

In Brazil, the price increases for diesel and gasoline were 23.6% and 8%, respectively. This pressured the Broad Consumer Price Index (IPCA), which has already increased by 4.72% over 12 months. And you may be wondering: what does this mean for your wallet?

What changes for those who earn a salary and pay bills?

With inflation rising and interest rates also high, the scenario becomes complicated. If you are salaried, the first thing you will notice is the reduction in purchasing power. If your salary doesn’t keep up with inflation, you will see that the same amount you used to spend is no longer enough to cover your expenses.

For example, if you spent R$ 1,000 per month on essential expenses and inflation has now increased prices by 4.72%, you would need R$ 1,047 to maintain the same standard of living. This doesn't account for other expenses that may have risen, such as transportation and food.

What to do?

Now it’s time to take some concrete actions to adapt to this scenario:

• Adjust your budget: Review your financial plan using the 50/30/20 method. If the portion allocated to essential expenses has increased, you may need to cut spending in the wants or savings categories.
• Seek alternatives: Consider cheaper transportation options, such as carpooling or public transport, to save on fuel.
• Monitor your spending: Use financial control apps, like ADXIS, to track where your money is going and adjust as needed.
• Consider investing: With high interest rates, fixed-income investments can become a good option to protect your money from inflation.

Connecting with your financial organization

Understanding the relationship between geopolitical events and your financial health is crucial. At ADXIS, we help you organize your finances and prepare for uncertainties. Using the 50/30/20 method can guide you in adjusting your budget to meet new economic realities, ensuring that your goals do not fall by the wayside in tough times.