The Seacoast BankNote

How to Save Money During Inflation

Reviewed by: Jo-El Gonzalez

If you’re like many consumers, higher than average grocery bills and increased costs for goods and services are stinging your pocketbook a little more lately. The culprit, experts say, is inflation and its effects on the US economy.

woman putting money in a piggy bankEveryday staples such as flour for baked goods, breakfast cereals and eggs have seen prices rise in the double-digits, with the latter commanding a 38% price increase over average costs. Summer travel, a big contributor to the Florida economy, may have slowed as well as hotel and gas prices inch up.

According to the U.S. Bureau of Labor Statistics (BLS), inflation is hovering around a 40-year high, leaving many to rethink their spending and adjusting their lifestyles to save money.

What is Inflation?

Inflation is the rate at which prices increase over a set period. During times of high inflation, prices of consumer goods and commodities can go up significantly, which translates to rising costs at the grocery store and gas pump. While these price increases can be tough on your wallet, certain actions can help you better manage your money during high inflation.

Here’s what to know if you’re pondering how to save money during inflation.

What items and industries see the highest price increases during inflation

Consumers typically see price hikes at the grocery store and restaurants when inflation is high. Energy prices also increase, meaning you’ll pay more at the gas station or for the natural gas you use to heat your water. Per 2022 BLS data, food and energy prices increased by 10.4% and 46.1%, respectively, the largest percentage increases since the early 1980s.

What steps can consumers take to minimize the effects of inflation now?

1. Reconsider your budget

Looking at your budget and rebalancing where necessary can help combat the effects of inflation. For instance, can you reduce some of your discretionary spending? Consider eliminating some streaming services or opting for eating at home rather than dining out to help keep costs manageable.

Also look for ways to make budgeting and tracking your spending easy. For instance, you might use budgeting features within an online banking app or debit card controls to keep tabs on your spending habits.

2. Review your investments

Inflation spikes often impact the broader economy, which can in turn impact your investments. Consider meeting with your financial advisor to ensure you’re in a good position to weather an array of economic circumstances.

3. Grow your emergency fund

Prices of things like auto parts can also increase sharply during high inflation. So if your car breaks down and you need to have it repaired, you’ll likely pay more at the mechanic. Combat this risk by growing your emergency fund. To do so, consider reallocating some of your discretionary spending to your savings to help protect yourself financially.

What steps can consumers take to future-proof their budgets during times of inflation?

mom on the phone holding toddlerBesides taking initial steps to combat inflation right now, also consider the bigger picture to help future-proof your finances when inflation is high.

1. Consider your savings goals

Review your short-term and long-term savings goals. Look at how you’re tracking toward each, and if you need to make adjustments.

Opting for the right type of account for your money may also help accelerate your savings. While you might want to keep some cash in an easy-to-access savings or money market account, also consider a longer-term savings option like a certificate of deposit (CD) account. CDs generally have higher rates than traditional savings accounts, making them a decent choice for long-term savings goals.

2. Keep paying yourself first

Paying yourself first involves prioritizing saving and investing when it comes to money management. Automatically depositing a portion of your paycheck in savings each week is a good place to start. You can also set up automatic transfers to your savings and investment account to help future-proof your finances.

3. Make budgeting a habit

If you make budgeting and tracking your spending ongoing habits, you’ll always have a solid understanding of where you stand financially. You can also more easily map out how you’ll reach your savings goals. Make it a point to review your budget periodically and adjust where needed, and rely on spend tracking apps and tools to stay on target. Many banks and credit unions offer budgeting apps directly within their online and mobile banking software.

High inflation can make everyday goods more expensive. But fortunately, there are steps you can take to offset the effects of high inflation. Budgeting, meeting regularly with a financial planner and focusing on your emergency fund can all help in the short term. Choosing the right accounts for your savings goals can also help you future-proof your finances. Compare savings accounts at Seacoast Bank to find the best option for your money.


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