The Not So Great News
As many of us would now know, the 2nd of September raised interest rates up 75 points to 3.25%. According to Reuters, the Bank of Canada believes that it may need to continue to raise rates to fight stubborn inflation. So more rate rises may still be on the horizon.
Now For The Good News
While this may feel like a gloomy start to Fall, the good news is rate rises won’t last forever. The Bank of Canada is using interest rates to help fight growing inflation, which is predicted to help stabilize the market. This should cause rates to come down in 2023/2024. History has shown that the market always comes back and corrects itself over time.
What You Can Do Right Now
As interest rates rise, there are some simple ways you can save money in your monthly budget. If your mortgage is on a variable rate and is riding the interest rate wave, then knowing it will eventually calm down can help you plan to ride it out now.
Tips to Manage a Tighter Budget:
START WITH YOUR WEEKLY GROCERY BUDGET!
Make a list for your weekly shopping and stick to it!
Buy generic brand products.
Buy in bulk and freeze or store- Costco is great for this!
Don't shop when you're hungry or take the kids with you.
Avoid take-away meals.
Eat out only once a week, bi-weekly or cook at home.
Make your coffee at home and take it with you to work.
Other helpful tips:
Reduce your streaming services down to one, two or none.
Plan all your errands into one trip to save fuel.
Download the GAS BUDDY App, as we mentioned before and fill up when fuel is cheapest.
Get a cheaper cell phone plan.
Tips to Prepare for Rate Increases:
Here's what the Canadian Government advises:
Cut down expenses so you have more money to pay down your debt.
Pay down the debt with the highest interest rate first, so you pay less money towards interest.
Consider consolidating debts with high-interest rates, such as credit card debts, into a lower interest rate loan.
Avoid getting the biggest mortgage or line of credit that you're offered.
Consider how borrowing more money could limit your ability to save for your goals.
Find ways to increase your income to help pay down debt.
Make sure you have an emergency fund to deal with unplanned costs.
Most of all, don’t panic.
If interest rate rises are becoming unmanageable, try talking to your bank or a financial planner to implement a plan.