High prices and interest rates: expert advice on managing your money
Careful budgeting, managing borrowing costs, protecting cash reserves and limiting financial risks: experts tell Euronews how households and businesses can cope with inflation and high interest rates.
Residents of Europe are facing increased financial uncertainty as soaring living costs, fluctuating energy prices, and higher borrowing costs create a complex environment for planning even short-term decisions. Financial experts at the HAT International Treasury Summit in Athens offered advice for consumers and businesses navigating these challenges.
Janet Legge, deputy chief executive of the UK-based Association of Corporate Treasurers, advises a cautious approach due to global uncertainties. Before making significant purchases or starting a business, Legge suggests asking key questions: is the expense essential, can it be covered without depleting savings, does it require borrowing, and what impact would reduced income or rising essential costs have?
Interest rate forecasts are highly uncertain, especially for those with loans or considering new debt. Legge notes that interest rates are expected to decrease, but recent history shows forecasts can change rapidly. In such an environment, volatility is likely to be the new normal, requiring constant adaptation.
Consumers should manage their spending carefully, tracking monthly outgoings and planning purchases more meticulously. Distinguishing between essential expenses, like housing and energy, and those that can be adjusted more easily is also crucial. For businesses, uncertainty extends beyond product prices to financing costs, raw material supply, and future investments.
Gilles Bonn-Long, an executive in corporate cash management, emphasizes the importance of risk-limiting strategies, or hedging, to protect against rising variable interest rates and commodity price changes.
Expert Ralf Kesten of German company cflox acknowledges higher interest rates have increased operating costs for businesses, straining liquidity. However, he believes more solutions are now available to help businesses and consumers manage these challenges. Despite the current uncertainties, experts agree that preparation is vital.
Consumers must have a clearer understanding of their finances and be more cautious with commitments, while businesses must identify risks early and develop strategies to address them. Rather than rushing or delaying decisions, experts recommend making informed, realistic, and adaptable decisions based on available information.
Written by urgent.news from Euronews's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
