Fiscal Responsibility in Changing Economies


Dealing with different economic climates is a part of life – from the impact of hurricanes on discretionary income, continued interest rate hikes to counter inflation numbers that barely seem to be moving, and approaching holidays – but whatever the situation, the age-old lesson of being prepared for the unexpected rings true.

One of the most important concepts in economics, the value of money, is constantly put to the test. In these uncertain times, protecting your nest egg is a key consideration. Potential market volatility and changes in interest rates can be stressors in the financial process.

Strengthening fiscal responsibility in changing economies means trying to avoid costly pitfalls. There’s no better time than now to think smart.

Create a budget.

According, more than 55% of Americans don’t use a budget and don’t know how much they spent the previous month. Building a budget forms positive habits toward spending versus overspending and allows you to consider where financial sacrifices can be made, helping to reduce stress by providing a realistic roadmap for your money.

There are several options for creating a budget, either with traditional pen and paper or with online tools that often do much of the work for users after entering numbers. Whichever method you choose, a good budget helps prioritize spending and determines ways to achieve financial stability. It’s also a resource for achieving important milestones, like renovating a home, planning for college, or saving for a dream vacation.

Know your loan options.

If you own a home and want to make improvements, financial responsibility helps set a clearer path to achieve that goal.

A home equity line of credit (HELOC) is a way to leverage the equity in a property. Tapping into a HELOC can fund a repair project or a much-needed repair, which could increase the value of a home. It is also helpful that debt consolidation pays off those with higher interest rates, such as credit cards, and can improve credit scores.

Access to HELOC funds means you only pay for the amount you use, offering flexible spending that can have lower interest rates than other types of loans. With more purchasing power comes great responsibility. A HELOC is a poor choice if the borrower cannot make their payments and risks losing their home, or is looking to finance a vacation or depreciate an asset, such as a car.

Interest rate increases have created an uncertain environment for many homebuyers. A long-term fixed rate mortgage is a traditional method of home ownership, while adjustable rate mortgages (ARMs) are a second option that may be a better choice today for some, as it offers the possibility to lock in a lower IPO interest. rates, lower monthly payments, and the borrower can usually qualify for a higher loan amount.

In Naples, ARM applications are on the rise. ARMs typically start out with a low fixed interest rate for 3-10 years, and after that the rate adjusts periodically based on market conditions. The current economic climate is atypical in that the ARM rate is unlikely to rise after the fixed rate expires.

Plan for business growth.

If you’re looking to start a new business or expand a company’s product line or footprint, there are a number of ways to make your money grow.

According to the Economic Innovation Group, nearly 5.4 million applications were filed to set up new businesses in 2021 – the most for any year on record. By partnering with a local bank for a Small Business Administration (SBA) loan, business owners are offered more flexibility in the borrower’s required capital investment, funds for working capital , repayment term and other factors designed to improve the chances of business success. .

The SBA may be more familiar to you because of its important role in helping small business owners navigate the COVID-19 pandemic with programs such as PPP and EIDL, both offered at Centennial Bank. Although these programs were targeted to provide relief from COVID-19, the SBA offers many financing options to help small business owners.

Know the options available.

Difficult times will arise; it’s only a matter of when. As Warren Buffett said, “Risk comes from not knowing what you’re doing.”

There is some level of risk in almost everything we do, but being prepared – by understanding the economic landscape – plays a vital role in everyday life. Knowledge is power, and as a current or future home or business owner, knowing what loan options are available will help you make the best money and life decisions. ¦

– Jodi Mikan is senior vice president of commercial lending for Centennial Bank in the Southwest Florida market. Centennial Bank, a Home Bancshares (NYSE: HOMB) company, is a full-service financial institution with branches in Florida, Arkansas, Alabama, Texas and New York and total assets of nearly $25 billion. . For more information, visit

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