Inflation is hitting everywhere, from gas prices to the grocery store. As the rate of inflation hikes, more people are finding it difficult to stick to their budget, and affording simple necessities is becoming harder, even for people working full-time jobs. Fortunately, there are some things you can do to increase your financial security during seasons of uncertainty.

Whether inflation lasts six months or five years, it’s important to be prepared. Here are five smart money-saving tips you can use to fight price increases  — and how Accrue Savings can help you save toward big purchases during times of high inflation.

Inflation is generally determined by whether or not the Consumer Price Index (CPI) is going up or down at any given time. The CPI is a measurement of the average amount of change in the prices of goods and services paid by consumers. If they’re paying more money, that means the CPI — and inflation — is high. The reverse is also true; when the CPI decreases, so does inflation and its effects.

When inflation goes up, the purchasing power of the dollar decreases. This means that people need more and more money to pay for the same things, making it harder to save for large purchases and emergencies. The Federal Reserve tracks inflation rates and publishes quarterly reports that individuals and financial institutions can use to plan ahead.

Tips for adjusting your spending habits

• Use cash whenever possible. It’s way too easy to swipe a card for any purchase your fleeting heart desires. But if you use physical cash, you’ll think a lot harder about your purchases because you’ll be able to see the money you’re shelling out — and what you have left.
• Try the 50/30/20 rule. This budgeting guideline suggests that 50% of your income should go toward essential needs like housing and utilities, 30% toward discretionary wants like entertainment and vacations, and 20% toward savings and debt. It provides a simple framework for managing finances and making informed decisions about spending and saving. 
• Cut unnecessary expenses. You’d be surprised how quickly a couple of streaming services, coffee shop stops, and “treat yourself” days can snowball into hundreds of dollars spent per month. 

List your monthly expenses and categorize them into “needs” and “wants,” along with their cost. The first thing to get rid of are things you don’t use, like a streaming service you haven’t watched in months but continue paying for. Work your way up from there — it may involve having some tough conversations with yourself about what you truly need.

A good way to save money during periods of high inflation is to diversify your investments and put your eggs in multiple baskets, so to speak. This can help you earn higher interest rates and get more perks and rewards than if you put all your money into one savings or checking account.

Plus, if all your investments are in one place and that financial institution goes under, that means everything you have is at risk. For example, if all of your money is in one uninsured account and the bank catches on fire, you probably won’t get anything back and will have to start over from the ground up. But when your portfolios are diversified, you can rest easy knowing that you have contingency plans in case one or more of your assets are negatively impacted.

How to diversify your investments

• High-yield savings account
• Fixed-rate certificate of deposit
• Real estate
• Stock market
• 401k retirement accounts
• Roth IRAs

Regardless of where you put your money though, make sure the account is FDIC-insured so your funds are protected in the event something happens. However, it’s important to remember that FDIC insurance only covers funds when the bank is at fault for the loss. Lost or stolen funds generally can’t be replaced.

TreasuryDirect is a government-run agency that can help you protect your savings against changing inflation rates with U.S. bond investments. These are called Treasury Inflation-Protected Securities, or TIPS, and the value of these bonds fluctuates up and down with inflation rates — but never below the original principal amount.

Say you buy $300 in TIPS and cash out a year later. If the inflation rate that year was 6%, you’d get $318 back. If you keep that money in TIPS instead of cashing out and the next year’s inflation rate is 6.5%, you’ll get $338.67 back. But if inflation goes down, you’ll get at least $300 back no matter when you cash out.

Another critically important thing to have when you notice inflation beginning to rise is a robust emergency fund. You can dip into this money if things cost more than you have budgeted for until you can adjust your financial plan. Then, you can replace what you’ve taken out as you become more accustomed to a higher cost of living.

If you haven’t yet created an emergency fund, now is a great time to start. If possible, try to save between one and three months' worth of income to give yourself a good cushion to protect against illness, injury, job loss, and anything else that might cut into your available funds.

If you have an emergency fund already, it’s time to get serious about building it up. You want to have enough money set aside to cover not only your major expenses like rent, transportation, and groceries but also unexpected things that may come up. It’s hard to be confident in a constantly changing economy, but having a good emergency fund with plenty of money in it can help give you peace of mind.

Strategies for saving and growing your emergency fund

With inflation seeming to skyrocket by the week, it may seem impossible to put money back for emergencies. You may be struggling just to cover your costs. Try cutting out extra things you don’t need, like subscriptions to streaming services or gym memberships, and start funneling that money into your savings accounts instead.

You can also set up automatic withdrawals from your checking account to your savings to make sure you’re consistently growing your emergency fund in the event that inflation continues to worsen.

Shopping for the things you want and need during times of rising inflation rates takes patience and perseverance. Since the overall value of the dollar is down, you need to make each one go as far as possible. This means shopping for deals and discounts wherever you can, especially if you’re not typically accustomed to driving a hard bargain.

Tips for reducing unnecessary expenses

• Unmarry brands. Try purchasing off-brand versions of things you normally buy. Oftentimes, brands manufacture or sell the exact same product or service, just with different packaging on the outside or a different marketing strategy. Then, consumers are the ones who pay extra for this marketing when brands hike their prices to cover the cost of television commercials and merchandising materials. You can also buy used to save even more money.
• Buy quality. You might be tempted to purchase the cheapest version of whatever it is that you need, but that’s a trap by design. Companies often sell the poorest-quality items at rock-bottom prices, which seems like a great deal until you have to replace what you bought, possibly even multiple times over. Instead, look for well-made products that may cost more upfront but will last longer and cost less over time.
• Find serotonin in other ways. There’s some truth behind the phrase “retail therapy” — shopping actually releases happy chemicals in the brain, like serotonin, dopamine, and endorphins. These can help to reduce anxiety and increase contentment, helping shoppers to feel accomplished and rewarded. 

But spending too much money on things you don’t need or really want can lead to feelings of regret later on. Look for other ways to reward yourself for a job well done or to make yourself feel better after a tough day, like taking a hot bath, watching your favorite show, or making a special meal.

Sometimes, you just need more money to cover the rising costs of necessities during times of high inflation. No amount of budgeting or finagling your finances can suddenly help you afford everything when there aren’t enough funds to cover it.

Look for ways you can generate additional income for the long or short-term — whatever you can do to bring more money in without losing too much on whatever expenses are needed for your new venture.

Top side hustles to try

• Ridesharing & deliveries. Uber, Lyft, DoorDash, and Grubhub are all easy to join and let you work when it’s most convenient for you. So if you work during the day and want to Door Dash at night and during the weekend for tips, you can.
• Open an ecommerce store. If you make something small that can be easily shipped, you can open an online store where people can purchase items from you. Just make sure your expenses are lower than your revenue so you’re actually making money.
• Become an influencer. If you’re handy with social media, you can build a following that you can use to pitch to brands who may want to hire you to create content for their products. User-generated content (UGC) is currently a hot commodity, and brands want influencers who look and sound like regular people to promote their products or services, so there are a lot of opportunities available if you want to make it work.
• Tutoring. Students of all ages need help with their homework or test prep, and if you have the education and experience, you can be an online tutor. Like with ridesharing and delivery services, you can set your own hours and work when you want to.

Learn how Accrue Savings can help you save money during times of inflation

Saving money as inflation rises can feel like an extreme sport, but it doesn’t have to be. Accrue Savings is a new type of service that allows you to save for the things you want and need while getting top discounts and cash back from brands who want to pay you for saving toward their products.

Here’s how it works:

• Select a brand you want to shop with and an item you want to start saving up for here.
• Make one-time or recurring deposits at a pace you’re comfortable with until you reach your savings goal.
• Earn up to 20% from brands toward your purchases. Buy your item using an easy virtual debit card and enjoy your savings!

You can also crowdfund toward your purchase with Accrue Savings. Just share the link with friends and family and they can donate. Your funds are kept in an FDIC-insured account and can be taken out at any time without penalty, so you know your money is safe no matter what happens with inflation.

Get your savings on track (even in times of inflation) — sign up for Accrue Savings today!

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