Tips to Save Money in Times of Inflation

Jan 4, 2024 Reading time : 5 min

Inflation is an expansion in the money supply – which has the unfortunate flow-on effect of increasing prices for common goods and services. This is problematic for people, as the price increases don’t keep pace with wages or interest on bank deposits. The $100 in your pocket now may only be worth about $90, compared with a couple of years ago (in relative terms). Of course, now you have to come up with that extra $10, which can add up quickly when it happens to your fuel, utilities, grocery, and other bills.

This might spell doom for your hard-earned savings (and economists often say that inflation is a hidden tax on savings) but there are ways you can save during times of rampant inflation. Here are some tried and true tips – some dating back centuries!

Set a Budget – and Stick to It

One of the sure-fire ways you can find ways to save money is by setting up a household budget. You may limit certain pleasures or unnecessary spending by figuring out how much money is spent in various areas. In this manner, you may track every expenditure and redirect your money to financial savings or debt repayment. The hard part? Sticking to it every week. You can usually use money management apps or your own NetBank app to help you with this, though.

Find Cheaper Alternatives – or Get Rid of Things

With your budget set up, you can audit your finances. Are you paying for subscriptions you don’t use? Get rid of them. Use this time to switch to cheaper utility providers, internet service providers, and even mortgage lenders. Consolidate smaller high-interest debts into one loan and concentrate on paying that off to become debt free.

Plan Your Purchases Ahead of Time

Making purchases with a plan in mind can help you save a lot of money. A new appliance should only be thought of at certain times of the year, like the conclusion of the financial year or during sales. Planning out your meals in advance will help you stock up on essentials, so you only need to add one or two items to prepare a healthy and fulfilling meal for the family. Your weekly shop may be determined by what’s on special – which can add variety!

Pay Annually Instead of Monthly

If you can choose the annual option instead of the monthly option, be it for insurance, streaming services, or even the gym, you will save money over the long term. Most services will give you an upfront discount for paying in a lump sum. If you have five or six services you pay for monthly, saving $10 or $20 here per month will add up to hundreds – if not thousands – by the end of the year. Instead of paying for the same service without any increase in value, funnel the funds to a high-interest savings account or ETF.

Got Loans? Switch to Fortnightly Payments

Another way that paying monthly doesn’t help – did you know you can pay off your loan earlier without penalty if you switch to fortnightly payments? Instead of 12 monthly payments, you make 26 fortnightly payments, which works out to one extra monthly repayment per year. If you have a five-year loan on a car, for example, that means paying off the loan five months earlier than expected – and saving interest to boot.

Save Using a High-Interest Savings Account or ETF

One of the few upsides to inflation is rising interest rates – which also extends to interest rates on deposits. To prepare your household for annual purchases, you should deposit savings in an account that has a high rate of interest. To promote recurring contributions, these accounts provide bonus interest or interest that is regularly high. You may also look at apps to help you invest small amounts in an ETF (a big share fund) – though withdrawing this money can be difficult but does usually beat bank account returns by a significant margin. If you’re unsure, talk to your financial adviser.

Use a Cash Back Credit Card

Many financial institutions today provide credit cards with many offers and benefits. You can take advantage of the card and its perks. Do thorough research about your requirements and eligibility, and opt for a good credit card for your future expenses. 

Expand Your Income Sources

Don’t rely on a single income in tough times. Go for part-time side jobs, freelancing projects, etc., and boost the chances of your side earnings. Multiple sources of income not only will help you in times of price hikes but will help you in saving for the future, and expansion of your personal skills.

Get Rid of Unwanted Subscriptions

At the time of market boom, you can start cost-cutting by canceling out the unnecessary subscriptions or plans of streaming or gaming platforms, this can help you a lot in saving those few bucks. 

Final Thoughts

Inflation, deflation, or recession in the market is always uncertain, though being prepared for any changes is necessary. So, start analyzing your budget, expenses, and income and seek guidance for better management.