Today’s high inflation rates have reduced most people’s spending power. Many consumers are having to adjust their shopping habits to ensure that they can afford their essential expenses.
Thankfully, you can implement several creative strategies to save money and maintain an optimal quality of life while prices remain high.
How to Save Money During High Inflation
There are many ways to save money during high inflation. Adopting several of these strategies can help you keep more money in your bank account amidst rising interest rates.
In alphabetical order, here are the top ways to save during inflationary times and avoid letting higher interest rates derail your personal financial wellness.
1. Add Saving to Your Budget
It’s critical to include saving money in your budget. Being intentional about setting aside cash for future expenses or a rainy day is an excellent first step since it can ensure you are being vigilant about saving.
Additionally, saving money can help you afford major purchases later on so that you won’t have to go into debt or delay making a purchase.
After reviewing your spending patterns, an easy starting place can be committing to automatically transfer $100 from every paycheck into your savings account.
Another option is practicing the 50/30/20 rule where (if possible) 20% of your income goes into savings.
If either of these initial suggestions are too challenging to afford, determine which of your expenses you can cut. Then, you use your cost savings to fund your savings account instead of putting it towards another purchase category.
2. Ask for a Raise
Typically, employers offer raises of up to 3% annually to keep up with inflation. However, that precedent is insufficient since the official inflation rate is near 8%.
You have more negotiation power to get a raise in a tight labor market where many businesses need employees. In most cities, it’s not uncommon to see “Help Wanted” signs at many locations.
Your employer may also be more agreeable to salary increases if your co-workers are currently leaving for better opportunities.
Before asking for a raise, be sure to have some compelling reasons as to why you deserve an increase in pay.
Some topics to research may include:
- The average industry salary for your position
- Your qualifications and recent achievements
- Learning additional skills to justify a pay raise
After conducting your preliminary research, you can choose a desirable pay raise amount. If your boss cannot offer more money, perhaps they can provide another benefit like a more flexible schedule.
The dynamics differ for each workplace, and this conversation can result in several options to improve your employment situation.
3. Buy Cheaper Alternatives
As the price of goods and services goes up, switching from an expensive product to more affordable alternatives can be an effortless way to save some dough.
One of the best options to consider for huge savings is cable TV. Research studies find that most cable bills range from $100 to $200 to watch the most desirable programming.
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For example, the Sling Orange package costs $40 per month and streams ESPN, Disney, CNN and TBS. If you’re more of a professional sports fan or reality show enthusiast, the Sling Blue plan costs $40 monthly. This package offers FOX and the NFL Network but not ESPN.
If your budget allows, you can subscribe to the Orange & Blue combo package for $55 to get the full lineup and extra savings. All plans include 50 hours of cloud DVR.
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Canceling your cable or satellite TV plan isn’t the only way to save a small chunk of change.
Some of the other ways to find cheaper yet comparable substitutes include:
- Buying generic groceries and medication
- Choosing cheaper vacation destinations
- Comparing prices between competitors
- Using meal delivery kits instead of visiting restaurants
- Shopping at consignment stores instead of buying “brand new”
Finding ways to get better prices on items and services can help you combat the impact of inflation on your wallet.
4. Cancel Unused Subscriptions
Recurring subscriptions are a convenient way to access premium content and enjoy specialized services at a low price. However, if you have multiple memberships, you’re likely not using some of them to their full potential.
As a result, unused services could unnecessarily minimize your disposable income.
Thankfully, most services don’t have cancellation penalties. This means that you can easily cancel them after reviewing your spending history and identifying the unwanted services.
Subscription services can include these categories:
- Child activities
- Gym memberships
- Meal kits
- Music and podcasts
- Newspapers and magazines
- Satellite radio
- Shopping clubs
Canceling subscriptions isn’t the only way to spend less money. You may also be able to negotiate a lower rate for services that you can’t live without.
For example, you could switch to a cheaper phone plan. Some services offer better rates to new customers, while existing users pay more for old plans. A brief phone call or email could get you a better rate as a loyalty benefit.
5. Get a Side Gig
Sometimes, making more money can be an effective strategy since you can only trim monthly expenses by so much. A side hustle lets you earn extra income in your spare time.
There are many online and local ideas that you can pursue. Each requires a different skill level and time commitment. They also differ in terms of pay potential.
Online surveys and playing games are easier ways to make money online as you don’t need special skills or extensive amounts of time. However, you will only earn a few dollars for your effort.
Activities that require more time, such as freelancing or making deliveries, can pay similar to a part-time job yet offer more schedule flexibility.
Some of the possibilities with minimal startup costs include:
- Dog walking
- Mystery shopping
- Selling unwanted clothing and electronics
- Transcribing audio and video
The beauty of side gigs is being able to work when you want and being able to stop when you need a break. For example, you can take on extra work for a few months while you are saving for a major financial goal.
While investing during inflation can be more volatile than in a bull market when most asset classes tend to thrive, it is possible to profit. Your investment gains can potentially match or exceed the inflation rate.
Earning higher yields from your long-term reserves becomes more critical during inflationary times because saving account interest rates struggle to keep up with inflation. Investing is riskier, but you have more opportunities to earn higher returns.
Inflation-linked U.S. Treasury Bonds such as I-Bonds and TIPS offer competitive yields and are low-risk. They can be an excellent investment option if you’re seeking fixed income or have the cash to invest for at least one year to avoid early redemption fees.
Dividend stocks or blue-chip stocks with healthy balance sheets and strong business models can also be worth investigating. Companies with pricing power that can absorb cost increases also have a better chance of delivering positive results for shareholders.
Maintaining a diversified portfolio that mitigates risk regardless of macroeconomic conditions is essential. You could gain some insights from the All Weather Portfolio, which is built to address various investment scenarios.
7. Pay Down Debt
Paying off debt can be another way to improve your financial situation. It can be easy to afford the monthly payments during non-inflationary times when the interest rates are lower.
However, when the Federal Reserve raises rates, the potential increase in expenses due to higher interest rates can derail your savings.
As rising prices and interest rates pinch your wallet, it can be challenging to pay your core living expenses while fulfilling your debt repayment obligations.
Instead of falling behind on your payments and potentially damaging your credit history, consider making extra debt payments whenever possible. These contributions reduce your lifetime interest rate costs and help you get out of debt sooner.
In time, you will pay off a loan and eliminate that monthly payment. Each payoff increases your free cash to spend on other budget categories.
Paying off debt quickly can require sacrifice to find the funds. For example, you could cut expenses, increase your income or sell unused belongings.
You can benefit the most by prioritizing your debt with the highest interest rates, such as credit cards, because more of your monthly payment covers interest instead of reducing the remaining loan balance. Then, after paying off these loans, you can shift to your lower interest rates.
Several debt repayment strategies can help you plan for the most effective payments.
The debt snowball method is very effective for many people. With this strategy, you focus on paying off your smallest loan balance first. After each successful payoff, you funnel your extra payment to the next smallest to reduce your monthly expenses.
As an example, if you have a credit card with a $700 balance and one with a $1,000 balance, start with the $700 balance first. Once you pay that off, you can use the extra funds you would have spent on that debt to pay off the $1,000 debt.
8. Reduce Energy Bills
Utility bills are a variable expense. Your highest bills can be in the summer and winter when you’re using the most energy to cool and heat your home.
While higher inflation is causing utility rates to increase, there are several ways to get lower electric bills.
Some of the best options include:
- Installing a programmable thermostat
- Decreasing thermostat setting when heating
- Increasing thermostat when cooling
- Avoiding energy consumption during peak hours
- Using energy-efficient lights and appliances
- Unplugging unused appliances
- Washing clothes in warm or cold water instead of hot
- “Winterizing” your house against drafts and the cold
Reducing energy consumption isn’t the only way to get a smaller bill. Your electric provider may also offer a community solar program.
These programs let you enjoy the benefits of solar without the expensive setup costs or installing panels on your properties. While you pay a subscription fee, you can receive solar credits to offset the price and reduce your monthly bill.
Another possibility for short-term relief is a levelized billing program. Your utility company averages your power bill for the last 12 months so that you can pay a flat fee instead of a variable amount.
But, of course, your bill amount will go up if future utility prices and consumption increase.
9. Set Spending Priorities
A cost of living increase can require you to prioritize how you spend your income. You need to evaluate the most important budget items and ensure you are allocating enough of your money to those needs.
Some of your necessary expenses to pay first include:
- Commuting costs
- Minimum loan payments
You can look for ways to save money on your essential expenses so that you have more to allocate for optional expenses.
Some of your other priorities can include:
- Child care
- Extra debt payments
- Home improvements
- Upcoming purchases
Inflation presents more financial tradeoffs as there is increased pressure to spend each dollar wisely in order to avoid financial stress.
For example, you may decide to pay down debt instead of investing your extra income since the net benefit can be greater than during periods of inflation.
It’s also likely that optional expenditures, like going out to eat or buying movie tickets, need to occur less frequently as you devote more to core expenses.
A budgeting app can help you make a spending plan that balances your short-term and long-term priorities. These platforms make it easier to visualize your future finances.
They can also compare your actual spending to your planned spending to highlight areas of improvement.
10. Use Cash Back Apps
While you can curtail optional expenses like traveling for vacations or going out for ice cream, you still need to buy essential items for your family.
In addition to redeeming coupons and waiting for sales, you can earn shopping rebates through cash back apps.
These rewards apps can help you save on gas, groceries and merchandise. They are free to join, and you can typically begin redeeming your rewards for cash or gift cards with a minimum balance of $5.
Depending on the offer, you can save on individual items or your entire purchase.
The offers can differ by app, so it’s best to try several at your preferred stores. For instance, some apps are better for in-store shopping, while others cater to online purchases.
You can also use multiple apps to increase your savings.
Many people are experiencing high inflation for the first time and seeing just how substantial of an impact it can have in terms of personal finance. It can be easy to stress over whether there’s enough money to pay your bills as prices continue to go up.
Luckily, the bottom line is that implementing one or more of these ideas can improve your finances and help you save for the future. Pick the ones that you feel are the easiest to implement and start saving money today.
This is a sponsored post by Sling TV. We only partner with brands that have a good reputation and that we believe are helpful to our readers.