How to Deal with Inflation

By Jennifer Topzand – BluPeak Credit Union Financial Wellness Team

To deal with inflation, focus on three moves — cut discretionary spending, increase your income where you can, and keep your savings in accounts that earn a competitive rate so they don’t lose value. Federally insured savings and term certificates at a credit union help your money keep pace as prices rise.

When prices climb faster than your paycheck, it can feel like your money disappears the moment it hits your account. Groceries, gas, streaming subscriptions, a cup of coffee — the cost of nearly everything has crept up, and that squeeze on your purchasing power is exactly what inflation feels like.

The good news: you have more control than it seems. Learning how to deal with inflation comes down to three moves — spending smarter, earning a little more, and protecting the savings you already have. Below are eight practical ways to make your dollars go further.

What Causes Inflation?

Inflation is the rate at which the prices of goods and services rise over time, which means each dollar buys a little less than it used to. The U.S. Bureau of Labor Statistics tracks it through the Consumer Price Index (CPI), and the Federal Reserve targets an average inflation rate of about 2% per year as a sign of a healthy economy. When inflation runs hotter than that, your everyday costs rise faster than usual. You can’t control the economy — but you can control how you budget, spend, and save in response to it.

How Can I Cut Spending During Inflation?

If money isn’t particularly tight, it’s easy to overlook a budget. But when inflation hits, you’re in a far better position to cut costs if you know what you’re actually spending on fixed expenses, discretionary items, and everything in between. BluPeak’s budgeting and savings calculators can help you map it out in minutes. A few places to trim:

• Apps and Subscriptions. Do you really watch every streaming service you pay for? Drop one to start and see how it goes.
• Switch to Generics. Many store brands are made by the same companies behind the name brands, so explore — you may find great, cheaper substitutes.
• Get a Smart Thermostat. A smart thermostat saves energy and money by easing up on heating and cooling when nobody’s home.

Learn to Cook and Cut Grocery Costs

Preparing meals and coffee at home instead of eating out can save big — and a couple of extra habits can save even more.

• Ditch Prepared Foods. Frozen entrees and pre-packaged meals are convenient, but you pay for that convenience. Opt for fresh produce, dried beans, rice, and lentils.
• Plant a Garden. Even a small sunny patch or a patio planter can grow vegetables and herbs. Beginner favorites include peppers, zucchini, tomatoes, and basil.
• Try Meatless Monday. Beef is one of the grocery items that’s risen most in price, so skip the meat at least one day a week.

Take on a Side Hustle to Boost Income

Many people find the simplest way to beat inflation is to earn a little more through a side hustle — rideshare driving, freelancing, or renting out a spare room. Be realistic about your spare time, and check that your full-time employer doesn’t prohibit outside work. Funneling that extra income straight into a dedicated checking or savings account keeps it from disappearing into everyday spending.

Maintain Your Rainy Day Fund

When everyday costs go up, it’s tempting to dip into your emergency fund. Resist the urge and lean on the ideas above instead. Inflation is one of the biggest reasons a solid emergency fund matters: if an unexpected expense lands while prices are high, it’ll cost more than ever. If you’re building yours from scratch, a dedicated savings account is the place to start.

Where Should I Save Money During Inflation?

Cutting costs is only half the equation. Where you keep your money matters just as much, because cash sitting in a low-rate account quietly loses purchasing power as prices rise. A couple of smart moves help your savings keep pace:

• Move savings into a high-yield account. Earning a competitive rate helps offset inflation instead of letting idle cash lose ground.
• Lock in a guaranteed return with a term certificate. A term certificate pays a fixed rate for a set term, so you know exactly what your money will earn.

At a credit union like BluPeak, your deposits are federally insured by the National Credit Union Administration (NCUA) up to $250,000 — so your savings are protected while they grow. Not sure whether to build cash or start investing? Our guide on the differences between saving and investing breaks it down.