Every January is surrounded by concerns about sporadic accounts payable. The first expenses of the year are punctual and, if there is no schedule, one or another bill can be forgotten.
So that this does not happen and results in unnecessary interest, the ideal is to prepare to organize all the financial commitments of the beginning of 2021.
Depending on your reality, the list of the first expenses of the year can be long. Among the most common expenses are the payment of taxes such as IPVA and IPTU, car insurance, registration of children at school or university and educational material.
In addition, shopping for Christmas and New Year's Eve can further compromise the budget of UK residents families.
In this article, we will talk a little about the main expenses at the beginning of the year, how to plan and tips to start the new cycle with financial health up to date. You know:
- What are the first expenses of the year ?;
- Tips to control the first expenses of the year.
Go ahead and have a good reading!
What are the first expenses of the year?
The expenses of each family are different, so it is important to be aware of the particularities of your reality. However, some costs are the same for many UK citizens. Below, we list some main ones.
One of the first expenses of the year is an annual tax, charged to all citizens who own their own property in the urban area of the country, whether paid or financed.
The call Property and Urban Territorial Tax (IPTU) it is the responsibility of the municipal administration. In this way, it is the city halls that determine their final value.
However, there is a basic calculation to arrive at the amount for each property, which is carried out as follows:
- The basis is the sale price of the property, that is, how much it will be worth if it is put up for sale at the time of calculation. This value is changeable and several factors can interfere with location, type of property, condition and even the age of the property.
- On top of this number, there is a fee that will determine the total tax for each unit. This percentage is defined by the city, so there is a distinction between the cities.
In the city of São Paulo, for example, the rate varies between 0.7% and 1.5%, according to the sale value of the property. A property valued at £ 400,000 has a rate of 1%, therefore, the IPTU charged will be £ 4,000.
- Property sale value (400,000) x rate (0.01) = £ 4,000
The IPTU rate is annual, however, normally, the city halls allow installments that can reach up to ten months.
Like the IPTU, the IPVA is another tax that is levied on individuals who own a property, in this case, a vehicle and is one of the first expenses of the year.
The Motor Vehicle Property Tax (IPVA) is the responsibility of the state in which the vehicle was registered.
It also focuses on the sale value of the car, which is defined by the state administration. Thus, there will be differentiation in the amount charged in each region of the country.
Other criteria, such as the vehicle category, also impact the final value of the IPVA and the value can be verified on the Detran website in your state. In São Paulo, just click on this link, access IPVA and consult debts.
Below, see an example of simple calculation to understand how the collection of IPVA works. If the value of your vehicle in the Fipe table is £ 40,000 and it is only powered by gasoline, the tax percentage will be 4% of the total.
- Car sale value (40,000) x rate (0.04) = £ 1,600
Therefore, the more expensive the car is, the higher the value of the IPVA. The tax can be paid in up to three installments (from January to March) or in cash. In addition, the expiration date varies according to the vehicle's final license plate number.
You can check the date of your car on the website of the State Finance Department. This is the list of São Paulo.
Is it worth splitting IPTU and IPVA?
Both the IPVA and the IPTU can be paid in installments, however, there is a percentage discount for those who make the payment in cash. This deduction in value varies according to the city or state responsible for the tax.
Before opting for a single installment payment, it is necessary to understand whether the discount is really worth it. To do this, calculate whether the profitability of the discount is greater than it could be if you left the money invested, for example.
To better understand, let's go to a simple example of single installment in IPVA:
If you live in the city of São Paulo and your tax is £ 1,000, the discount will be 3% of the total amount, ie:
- Tax (1,000) x Discount (0.03) = £ 30.
Thus, if you pay in cash, the value of your IPVA will be £ 970. To see if it is advantageous, the question is: between February and March (months when you would pay the second and third installments), is it possible to arrange for a low-risk investment that pays 3% in this period?
If we look at the safest types of investments, such as savings, the answer is likely to be no. The Selic Treasury, one of the safest, pays 2% per year, for example, much less than 3% discount in two months.
Given this analysis, the answer is that yes, it is worth paying cash if you have the full amount. However, if you do not have the necessary amount, it is not worth taking out a loan, as the interest will certainly be much higher than the discount.
At single installment of IPTU, the reasoning must be the same: in all the months that the tax could be paid in installments (ten in the city of São Paulo), would the profitability be higher in any investment if it paid in cash?
Using the Selic Treasury as an example, per year, the value will yield 2%, thus, the discount of 3% is still higher and the payment in a single installment is still worthwhile.
Usually, the renewal of insurance contracts (be they life, car, cell phones, residence, etc.) takes place at the beginning of the year. Stay tuned if this is your case and plan to have the money needed to cover this expense.
License plates and teaching material
One of the first expenses of the year that takes away the sleep of parents and students in general is re-enrollment in schools and universities. In addition, there is also the purchase of school and didactic material.
The registration fee is usually added to the traditional monthly installment and there is almost no discount negotiation, so it is essential to have this separate amount for this expense.
However, when it comes to school supplies, it is possible to make a good saving on the purchase of items. Some tips for finding better priced products are:
- Search in several different stores, as there is usually differentiation between competitors;
- Meet with other parents to buy in larger quantities and get discounts;
- Buy materials that are always on the list in advance, avoiding the usual price increase when there is greater demand for the items;
- Check the possibility of taking advantage of materials from previous years or exchanging with other parents;
Also, pay attention to the material list prepared by your child's school. According to Law 12.886 / 2013, the collection of products for collective use such as hygiene and cleaning or fees to cover expenses with water, electricity, telephone, printing and copies is prohibited.
The institution also cannot demand that the material be purchased at the establishment itself or determine brands and places of purchase, with the exception of handouts.
Tips to control the first expenses of the year
Some attitudes can compromise your budget and make the beginning of the year a real financial nightmare.
So, stay tuned to the tips below on how to control the first expenses of the year and start the new cycle with financial health up to date.
As we said earlier, sporadic spending can fall by the wayside, so take the time to plan your finances for the first quarter or semester of the year. List all fixed expenses in a table and add these extra costs.
See how much you will need to pay all the bills and, if necessary, use part of the 13th salary received at the end of the year to pay off the first expenses of the year and not start 2021 in the red.
Evaluates payment options (in cash or in installments)
Many people end up unbalancing the budget when paying the first expenses of the year. This is because they do not know whether to pay the debts in installments or to pay in cash. Of course, settling everything in sight will relieve your budget in the coming months.
However, this does not mean that you should borrow money, take money from your income and invest to pay off everything on the spot. The secret is to adapt everything to your reality and evaluate the interest on each account.
If the cash payment has a considerable discount, choose it. However, if you are going to split up any debt, prioritize to split up those that have a lower interest on this payment option.
Control credit card spending
The use of credit card in excess can be a real villain. Therefore, determine a maximum amount you can spend and write down everything you buy to have control and know when to reach the value.
If so, take a vacation to your credit card and choose to pay everything in debit so as not to directly impact the discharge of the first expenses of the year.
Save for next year's first expenses
If in 2021 you are going to have a hard time to be able to pay off all the installments at the beginning of the year, plan during all months so that this does not happen in 2022. Since, the first expenses of the year will always have (IPVA, IPTU etc.).
Thus, an important tip is to save throughout the year so as not to suffer from the first expenses of the year. Add up everything you will spend in 2021 and see how much you need to save each month to add the amount.
If the sum of all accounts is £ 7,000, it means that in the 12 months of 2021, you will need to save £ 584 per month. Being able to collect this amount throughout the year means that you will even have the amount to pay everything in cash, being able to escape the installments.
This article of our blog talks more about how to save money on a daily basis.
Help your employees with HR Consultants UKy
You as a company can also help your employees throughout the year by adopting the HR Consultants UKy in your company.
That is, employees can withdraw part of their wages at any time, depending on the days worked.
This increases the autonomy of employees in relation to managing their own wages and even contributes to reducing financial stress and lack of money. Thus helping their professionals to pay the first expenses at the beginning of the year.
If you are new to HR Consultants UKy, plan to implement it in 2021 and change your company's payment routine, including increasing the productivity, loyalty and gratitude of your employees. know more clicking here.
As we can see, in order not to experience financial difficulties with the first expenses of the year, the word is: organization. Therefore, try to have control over all your expenses and adapt your reality to your lifestyle.
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