budgeting tips for rising interest rates


Woman going through her budget and holding her credit card.

Most people are aware that interest rates have continuously been on the rise. And while the reason for this is to help curb inflation, it’s understandably stressful knowing that the cost of living and borrowing money is becoming more expensive. Fortunately, there are many ways you can navigate this period through slight adjustments to your household budget and financial plan! Continue reading to learn more AND keep an eye out throughout the blog for insightful Employee Pro Tips from a few financial experts at BlueOx Credit Union!

“A goal without a plan is just a wish” - Antoine de Saint-Exupery.

becoming “budget aware”  

Our purchasing power decreases as prices continue to rise. Therefore, it’s important to reevaluate and understand your financial situation during these times. This process is referred to as becoming “budget aware,” and financial advisors highly encourage it as a way to cope with inflation.

So how do you become budget aware? The first step is to take a complete inventory of your finances. This includes your income, debt, spending habits, and savings plan. Once you have a clearer understanding of your situation, you can begin to make adjustments to your current budget and prioritize your spending based on what is essential. You may decide to cut out monthly subscriptions, cut back on dining out, or stop using credit cards with higher APRs.

Becoming budget aware may seem like a long and overwhelming process, but luckily, there are many resources you can use to make it easier! Budgeting worksheets are helpful for tracking your monthly income and expenses. Blogs, such as How to Save Money and Budgeting 101, have great tips for creating a budget, tracking your payments, and setting S.M.A.R.T. financial goals. Also, nonprofit organizations such as GreenPath Financial Wellness are always available to offer their free one-on-one financial counseling, debt management services, and educational tools!

Check out these financial calculators from our partners at GreenPath! They were designed to help you budget, save, and gain a better understanding of your finances!

budgeting tips for everyday expenses

Two of the expenses most heavily impacted by rising interest rates are gas and groceries. Unfortunately, it can be hard to adjust our budgets for necessary items such as these. However, there are endless tips, tricks, blogs, and apps that can help consumers save money on these products. Continue reading to check a few of them out!

tips for “shopping smarter”

  • Did you know the layout of a grocery store is designed to make you spend more money? Seasonal/miscellaneous items are often placed along the checkout aisle to encourage people to make impulsive purchases. While the highest-priced items will always be placed at the shopper’s eye level because companies pay extra for these spots. Avoid these tactics by making a list before shopping, sticking to the items you’ve planned to purchase, and comparing your options!
  • "Shrinkflation" is one way that food companies deal with rising costs. This is where a company makes its product's packaging smaller while keeping the same price. Most consumers only pay attention to the price of an item and not the price per weight. However, considering your product's quantity and price may lead you to find a better deal.
  • Since 2019, the price of meat, poultry, and eggs has continued to rise. Consider cutting down on your meat consumption to avoid paying these higher prices. Cheaper ingredients such as beans, lentils, and mushrooms are great alternatives for any recipe and are just as tasty!
  • Use your resources! Check out smart-shopping blogs such as $5 Dollar Dinners and Budget Bytes for a wide range of delicious and affordable recipes.

the best budgeting and coupon apps

  • Rakuten – This app gives you coupon codes and cashback on your purchases. The best part is you don’t have to wait for the check to be sent – everything is paid quickly and conveniently through PayPal!
  • SnipSnap – The days of carrying around a stack of coupons can be behind you with SnipSnap! All you have to do is take a picture of the product you want to buy, and the app will bring up a list of available coupons for that item. It’s that easy!
  • Ibotta – This app makes almost every “best coupon app” list that is out there. This is because you can scan item barcodes and quickly determine if any rebates are available. You don’t have to do anything at the register when checking out. Instead, upload a picture of your receipt to the app, and you'll receive cash back! Once you’ve reached $20 in your app account, you can cash it out and have it deposited into your personal savings account.
  • Checkout 51- Earn cashback on groceries and gas with this app! Like Ibotta, you scan your receipt of the qualifying item, and Checkout 51 will deposit your earnings!
  • RetailMeNot – This is a one-stop shop for all your coupon code needs! Check out the app before you make a purchase to see if there are any qualifying coupons.
  • GoodRx – The price of prescriptions can add up quick! With GoodRx, you can search the name of your medication, along with your zip code, and the app will show you which pharmacies carry it and how much it'll cost!
  • GasBuddy – This app has been around for a while, but with rising gas prices, it’s more beneficial than ever. Simply search your local area, and the app will find the cheapest gas prices near you!

For tips on how to save money on back-to-school shopping, check out this blog from our partners at GreenPath!

BlueOx Employee Pro Tip:

“The best way to start saving money is to conduct a full review or audit of your spending account. It may seem daunting, but going through each expense and monitoring how often you spend the money is eye-opening! When I went through and realized how much money I was spending on ordering store-bought coffees, I realized I could have saved over $2000 a year just by stopping this one habit. Don’t get me wrong, I still splurge from time to time, but no more stopping by the drive-thru to grab an $8-$10 coffee daily!” – Adele G., BlueOx Credit Union’s VP of Lending and Marketing.

budgeting tips for debt

As interest rates continue to rise, other types of debt, including credit cards, auto loans, and mortgages, will also increase. Specifically, the average annual percentage rate (APR) for credit cards has reached nearly 21%. This can feel intimating for those who carry large amounts of credit card debt or cannot pay their balance in full each month.

In general, you should always aim to pay off your debt promptly; however, during these times, it’s more important than ever! Higher interest rates lead to higher payments and late fees. Two popular methods to help you pay it off quickly include the avalanche method and the snowball method.

With the avalanche method, you pay off your debt with the highest interest rate first and then move on to the debts with the lower rates. This will save you much more money in interest, although it'll take longer to get all of your debt paid off. The snowball method is perfect for those who need immediate success to stay motivated. With this method, you will pay off your lowest balance first and work up to the more significant amounts.

Another tactic for tackling credit card debt is transferring it to a new card with 0% APR for a limited time. You can save a lot of money by getting your balance paid before any interest kicks in! At BlueOx, we offer 6 months of 0% APR when you sign up for our Visa® Credit Card. As well as no annual fees, payment protection plans, and scorecard rewards!

BlueOx Employee P
ro Tip:

This can apply to everyday life, but for me, this applied to my finances as I navigated first-time home buying last year amidst the pandemic and economic decline. I took the goal of home ownership and then broke it down into evaluating my cash flow in and out of my account, reassessing “wants vs. needs,” gauging my credit score health, and ultimately began the process of saving for my new home build.

My go-to tool was my online banking platform and being able to look at auto pays and debits to see what I could cut back on and how much I could transfer to savings per paycheck, per bonus, per month. I retrieved a copy of my credit report and made sure there were no derogatory marks, and consulted my mortgage lender to see if there were any adjustments I needed to make. You can obtain a free credit report once yearly. I think it’s incredibly important to know where your credit score stands, what you could do to improve, and how to maintain a positive history so that when you do need to borrow, it'll be an easy process. Assessing wants vs. needs came in the form of things such as purchasing additional streaming services, specialty coffee, clothes, etc., and making sure that I wasn't spending extra money carelessly. Each month I made a list of things I knew I 100% would need to purchase and then left myself a budget for “fun” things that I stuck to so I could save more.

Overall, I was able to save for my home and had it built in 2021! I’ve been in my house for 1 year now and couldn’t be happier. Being a first-time homeowner, it's extremely overwhelming to navigate the financial aspects, and it was so great to be able to budget, save, and be prepared to have a smooth lending process. Set your financial goals and make it happen!” – Ashley S., BlueOx Credit Union’s Contact Center Manager.

budgeting tips for saving

It may be tempting to pause your monthly savings goal when interest rates rise because using that money toward household expenses and products would be more beneficial. However, consider scaling back on your savings amount instead. Even if you go from saving $100 a paycheck to $50, continuing to build your emergency fund will be extremely helpful with unexpected expenses, such as auto repairs or medical bills. If you have to, keep your savings account growing by cutting out unnecessary monthly bills such as entertainment, dining out, and subscriptions. 

Another factor to consider is that your return on savings may increase as federal interest rates rise. This means the more money you save, the more you'll earn off interest. A slight percentage increase may not seem significant - but it'll add up over time and is potentially the only benefit your bank account will see from rising rates!

BlueOx Employee P
ro Tip:

“I think the biggest gap in understanding finance comes from the idea of Opportunity Cost. Smarter people than I will define it better than I can, but in essence, that $7 coffee costs you far more than that $7 would imply. The $7 comes out of your account, sure, but you're also missing out on anything that $7 would've been able to get you down the road. The last 5 fast food bills that cost you $50 also means you need to borrow money for something you’re $50 short on in the future. It’s simple but profoundly important for saving and for general decision making.” – Drew B., BlueOx Credit Union’s Branch Manager.

what’s next?

At BlueOx, we care about our member’s financial health! Which is why we encourage you to go one step further in protecting your finances with IDProtect® Plus! Identity theft can compromise your credit score, lead to the loss of your savings, and give others access to your important documents. This service will help you avoid these threats and offers shopping rewards, travel discounts, and health savings! Click the following link to learn more.

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