Have you been experiencing the pain of inflation? American consumers are finding it harder to stretch their dollars when filling their gas tank or purchasing a week’s worth of groceries.

Inflation weakens the purchasing power of your hard-earned dollars, which is why it’s more important than ever to know how to protect against inflation. Here’s what you should know about inflation today and how to protect yourself financially:


What’s Causing Inflation?

The consumer price index is used to gauge the average cost of goods purchased in America and serves as a reliable indicator of inflation rates. As of August 2022, the consumer price index had risen by 8.3%, part of a broader trend representing the greatest increase in roughly 40 years.

There’s no one singular cause contributing to high inflation. Economic experts point to a variety of factors that include:

  • The ongoing supply chain crisis
  • Fertilizer shortages resulting from the war in Ukraine
  • Livestock illness and poor harvests
  • Rising housing costs
  • Ongoing fuel demands

While gas prices have eased in recent months, people still feel the pressure of rising consumer costs. That’s why it’s important to know how to counter inflation when it comes to your personal budget.

How to Protect Against Inflation: Solutions for Consumers

Even the most optimistic economists are unsure that inflation will subside until 2023 or 2024. In the meantime, it’s time to sharpen your savings strategies to stay afloat during this rough season.

Tighten Your Budget

Chances are that you’ll find it harder to stretch your family budget to cover the costs of gas, groceries, and utilities. Altering your spending habits can prevent you from exceeding your monthly budget, helping you stretch your dollars as far as possible.

Cutting back on discretionary spending can help you save. For instance, if you’re used to going out to eat once a week (or more), try to cut back to once every two weeks. Get up a little earlier to make yourself a coffee, which can help you cut back on high-priced gourmet beverages on your way to work.

Become a Bargain Shopper

Knowing how to counter inflation at the grocery store is all about finding those bargains. Look for off-brand products whenever possible, as the brand name merchandise can carry a hefty price tag.

Many major grocery chains will advertise sales through their website or app, which can help you prepare a shopping list based on advertised specials.

Some retailers offer a loyalty membership program, so it can also help to shop at the same store. Many grocery chains even offer reward points on gasoline, which can ease the pain at the pump as you stock up on your essentials.

Delay Major Purchases

During a period of inflation, protect your saving strategy by delaying major purchases whenever possible. Car prices, for example, are at all-time highs due to the ongoing chip shortage.

The increased demand has even raised the price of used cars, and it could be some time before these prices normalize. If you’re able, keep driving your current vehicle until prices come back down.

Housing prices are also quite high. If you are planning a move, now might be the time to consider a remodeling project rather than trying to find a new home. An in-home renovation will be cheaper, and it can boost your home’s resale value once the market stabilizes.

Negotiate Bills

Look at some of the bills you’re currently paying for cable TV, streaming platforms, or your cell phone. It’s possible that these providers can offer a lower rate or some type of bundling service that can save you money.

Call your providers to see if they can work with you. If not, you might shop around for a bit and find an introductory rate from another provider that can reduce your monthly expenses.

Pay Your Credit Cards on Time

With your costs running high, it’s tempting to pull out the credit card to cover your expenses. And that’s perfectly okay as long as you pay your balance on time each month. In fact, certain credit cards can even offer reward points that can supplement your existing budget.

But debt has the tendency to snowball. If you forget to pay your balance each month — or only make the bare minimum payments — you could quickly find yourself faced with mounting debt. Never spend more than you’re capable of paying back in a month or two, and keep your credit card balances low.


Start a Carpool

Depending on where you live, you could have neighbors who work in the same area that you do. If so, you might suggest a carpool, which cuts down on the amount of gas you’ll be consuming each week.

The same might be true for kids and their after-school activities. Carpooling to sports practice can cut back on the number of trips you make across town, and it can be a great way to get to know your neighborhood families better.

Find a Side Hustle

Knowing how to protect yourself against inflation demands one of two things: reducing your spending or increasing your income. The above strategies involved reducing your spending. But if you’re still struggling, you might consider finding a way to increase your income with an extra job or “side hustle.”

This approach might mean grabbing a part-time job at an area business. You might also consider signing up for a ride-share service, working for a food delivery company, or even starting your own photography or web design service for some extra income.

Your second job doesn’t have to be forever. It can be a great way to keep your bills paid until nationwide inflation drops or you qualify for a pay raise at your day job.

Diversify Your Stock Portfolio

Investors should ensure that their stock portfolios are suitably diversified, containing securities that represent a range of different companies and industries. This way, your long-term investments are protected if a particular industry is hit hard by a volatile economy.

Many brokers offer mutual funds, index funds, and ETFs that can help you achieve diversity simply, though you can also select individual stocks and put together a balanced portfolio of your own.

Consider an Inflation-Matching Savings Account

One way to combat inflation, protect your saving strategy, and weather the storm is by investing in an inflation-matching savings account. Series I savings bonds were specifically created to protect Americans’ purchasing power during periods of inflation.

To augment your purchasing power, bond options exist that are keyed to the current inflation rate. That makes them ideal for short-term savings, though they can be used for long-term savings as well.

Bondholders can withdraw their savings without penalty within the first year, though if you cash in your bond before the end of the five-year term, you’ll lose your last three months of interest payments.

If you purchase series I bonds in particular, you can invest with as little as $25, though you can put an annual max of $10,000 into these savings bonds. How do these bonds protect your purchasing power? Bond payments include your fixed interest as well as the current inflation rate, which is adjusted twice per year.

As a general rule, bonds tend to offer better interest rates and terms than certificates of deposit (CDs), and the short-term options can be great for those looking for a quick way to protect their savings from inflation.


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