How to Survive Inflation: 5 Budget and Savings Tips

Although inflation rates change over time, it’s helpful to know ways to you could potentially reduce the impact of rising prices and make your dollar stretch further.

What is inflation?
Know which high prices hit you hardest
Look for ways to spend less for essentials
Cut home energy waste
Take control of recurring charges
Reduce higher-interest debt and look for ways to save
Embrace the opportunity for growth

What is inflation?

Inflation is when prices increase for a set of goods or services over a certain period of time.

Some economists expect and even favor a certain level of inflation as a sign of economic growth.¹ In the U.S., officials look at a 2% annual inflation rate as generally good for the economy.² Even at that level, prices for some goods and services may still go up and, depending on the product or where you live, some prices could rise even more.

Here are five ways to help you adjust your budget for inflation. Taking just one or two of these actions can help you keep more of your hard-earned money. They may also help you stay on track toward your financial goals, no matter what happens.

1. Know which high prices hit you hardest

It's easy to feel stressed by rising prices, especially since we seem to hear about them every day. To gain some control and peace of mind, take a look at how your budget lines up with your actual spending. This may give you a clearer idea of which price increases affect you the most.

If you drive to work every day, for example, figure out how much more you might be spending on gas than you expect. Look at the cost of your groceries over time. If you dine out or regularly order takeout from restaurants, those bills may be higher too.

Utility bills also fluctuate for many households from year to year. People dealing with severe winter weather are likely to feel the impact even more if prices are rising. If you work from home, that means 24/7 climate control, and it might now be a larger chunk of your monthly expenses.

2. Look for ways to spend less for essentials

Groceries and fuel are often two big items in family budgets, so it's wise to look for ways to spend less on both.

Save on food

There are some ways to avoid sticker shock at the grocery store. Planning meals in advance may help limit waste. One approach is to use affordable ingredients (like beans or lentils) that can be cooked many ways. Or try buying some of your food in bulk or adjusting your diet to include less-expensive meats and staples. There are several meal-planning sites and apps that cater to a range of lifestyles. Some of them even create a shopping list for you.

With list in hand, you can take advantage of the loyalty program at your favorite grocery store. Search for deals on items in the store’s app and look for in-store QR codes for further savings.

Beyond store apps, smart shoppers might also find additional savings by scanning their grocery receipts into a cash-back app that rewards you for many types of everyday purchases.

Save on fuel

You may also be able to save at the gas station by making some changes to your driving habits. Stick to the speed limit and avoid idling to improve fuel efficiency. Replace your engine oil on a regular basis. Make sure your gas cap is on properly to limit vaporizing gas.

Several apps are also available to help you, especially if you are going someplace new. Your maps app will show you the most direct route and how to avoid tolls. A separate gas app may point you to the best fuel prices at nearby service stations.

If you are traveling short distances, under a mile, consider skipping the car and walking or riding a bike if you are able and the route is safe. Carpooling and using public transportation are additional ways of getting where you need to go.

Trim your impulse spending

Don’t forget to consider your discretionary spending as well. This might mean cutting back on movie tickets (or going to matinees instead) or skipping the mall to avoid shopping temptations. There may be many ways you can find to spend less on items you don’t truly need. To keep your budget in line, consider following the 50/30/20 rule.

3. Cut home energy waste

Cutting home energy costs doesn’t need to be a chore. A big utility bill may be the push you need to finally tackle small, overdue fixes that can improve your home’s energy efficiency. Affordable fixes may be simpler than you expect. Here are some ideas.

Replace worn weather stripping or caulking around doors and windows
Install screens and ceiling fans to cut back on A/C usage
Program thermostat to lower the HVAC load overnight and when you are away
Replace air filters on HVAC units to improve efficiency
Clean windows to allow more natural light and reduce lighting and heating costs
Add motion sensors to automatically turn on and off lights
Cover exposed areas in attic with insulation

Some families even make a game out of establishing new energy-saving habits. For example, you could set up a reward system for turning out lights, hanging laundry to dry instead of using the dryer, and unplugging electronics when not in use.

4. Take control of recurring charges

Rising prices can creep into other household bills too. By reviewing your credit or debit card statements, you might uncover some surprising ways to save. There are also apps available to help you track and manage recurring subscriptions. They may help you cancel what you aren't using or help you negotiate lower-priced plans for cable, internet, and cell phone service.

You may also be able to cut your insurance costs. Compare car and home insurance quotes using online tools. If your needs have changed, lower-priced coverage might be available and make sense.

Each of these changes might save only a small amount of money on its own, but combined they could lead to significant savings.

5. Reduce higher-interest debt and look for ways to save

When prices increase throughout the economy, interest rates often rise also. Even in times of low inflation, consumers may pay relatively high rates for the money they borrow. Keeping your credit card balances in check may help reduce the cost of high interest rates. By reviewing your debt picture, you could find ways to pay down (or pay off) any higher-interest-rate debt.

Save with a set monthly payment

A debt consolidation loan with a fixed rate that won’t increase over the life of the loan may give you extra peace of mind if inflation increases. Customers find a personal loan can save you money on interest when consolidating higher-rate debt. 85% of surveyed customers said they saved money by consolidating debt with a Discover® personal loan and nearly half said they saved an average of $428 per month.*

Benefit from potentially high returns

The idea of saving while costs are rising may feel challenging. If you can save, though, rising prices and inflation may provide additional benefits. With interest rates higher, any savings you have can be put to good use. You might want to consider placing your money in a high-yield savings account that pays you a competitive rate for your deposit. Always check with a financial advisor.

Embrace the opportunity for growth

Rising prices may continue to be challenging for many people. But good financial habits may help you weather a storm. By including them in your financial picture, you might be in a better position to ramp up savings goals as prices settle down.

More importantly, the time and effort you put into adjusting your spending now could have you take a more thoughtful approach to your finances in the long run.

You might even find that being more deliberate about where you spend your money improves your quality of life. When you have fewer day-to-day money worries and a clear path to your financial goals, you may be able to focus more on enjoying your life.

Ready to take the first step and start saving some money? Use our debt consolidation calculator to see what you could save when you consolidate higher-interest debt.

¹ https://www.barrons.com/livecoverage/fed-powell-congress-testimony-speech-today/card/inflation-is-cooling-without-employment-pain-U4nWWGD564rBhoqVa2BO

² https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Inflation#:~:text=Most%20economists%20now%20believe%20that,is%20good%20for%20an%20economy

5 Tips to Deal With Inflation

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