How to Save Money During Inflation in 2023

When it comes to money, will power only goes so far. From simple things like paying your bills on time or managing your debt to saving up for retirement or college, it’s often difficult to keep cash in the bank when the economy is in a downward spiral. 

Today’s blog post is about how to save money during inflation.

Every middle-class person is scared of inflation. It can take a serious toll on your finances. When the prices of goods and services continue to go up, it can be very difficult to maintain a budget and save money.

If your earning is not very high or your family depends on one person’s income, inflation can pain you in all ways. When the prices of everything reach the sky but your salary remains the same. You hardly can think of ways on how to save your hard-earned money.

You have to consider everything that can protect your money and combat with the negative effects of inflation.

What is inflation?

Inflation is the rate at which the prices of goods and services rise. When the money supply grows faster than the economy, prices go up. Inflation can be caused by either an increase in the money supply or a decrease in the output of goods and services.

When there is more money chasing fewer goods, prices go up. Central banks use interest rates to control inflation. Too much inflation is bad for an economy because it leads to higher costs of living, lower purchasing power, and increased uncertainty. 

How does inflation affect your wallet?

It is important to be financially literate and understand the basics of inflation. Certainly, when the prices go up with every purchase, it can have a major impact on your wallet.

Inflation can be caused due to several reasons, political instability and natural disaster are one of them.

For example, the pandemic situation has made it the worst in almost all the countries. It has affected economically. The effects are deeper to the ones who are already struggling financially.

Inflation is not only about increases in the prices of goods and services but also cause wages to stagnate, makes it incredibly difficult for people to afford necessities.

I am here giving you a simple example of what I felt a couple of days ago while shopping. A few months ago, I used to buy vegetables at INR 300-400 that covers my entire week. Now, while keeping the budget in mind, it only last for 4 days.

Sometimes I feel questioning myself, are the days coming near when people can’t even afford to buy the basic commodities for their living.

Inflation lessens your purchasing capacity.

When your money is growing, it doesn’t feel much of a burden. But when your income remains the same, your spending increases not because you are shopping more but because the prices have inflated.

This particular article will demonstrate

How to save money during inflation and how to manage the impact of inflation

Plan Ahead

Planning is the key to make your life easier. No one knows when inflation will strike and make your living questionable.

Have a financial strategic plan ready so that when the inflation hits, it won’t affect your life so much.

So, what are all things you can include in your plan?

Be mentally prepared to live in a low budget.

Start eliminating your bad habits.

When the financial market is good, invest some in assets like house and gold. Invest in assets that will hold their value.

Start living by budget and save enough.

Stick to your budget

During inflation, sticking to your budget is more important than ever. You won’t even realize when all your money will be gone due to the high prices.

Simply, you have to follow a few basic tips –

Make a list and while shopping keep your budget plan in your mind.

Evaluate your spending habits minutely. Ignore spending money on unnecessary things or things that are not needed.

Think twice before you buy and buy in cash.

That’s it. Stick to these basic rules. You will face no issues regarding money crunch during inflation.

Focus on what you can control

Can we control inflation?

The answer is no. We can’t. But the government can if they implement the right policy. There are a lot of reasons behind an inflation. Certainly, the middle-class and the financially backward people get affected the most.

It’s better to focus on what you can control. You can control your spending habits, manage your finances, manage your budget and so on.

If you can mange these few aspects, you can survive the inflation.

Plan your meals

The next and the affordable thing to do when the inflation hit is to plan your meals. I think it is one of the most effective ways to save money in general.

Food is the basic need. I say, we earn to live and eat. But when in a crisis, you can save by trimming and making some changes like planning your weekly meals.

Spend time in cooking at home with minimal ingredients, feels immediate savings.

Planning helps you avoid food waste and saves you money. You may have to eat repetitive food to stay within your budget, but during inflation, this plan works the best.

For example, you have chicken and prawns in the refrigerator. You can think of a few easy chicken and prawns recipes. Note down the recipes and plan for which day to make which recipe.

Purchase low price food items like fresh leafy vegetables instead of meat and canned food.

Take advantage of deals

One way to save money during inflation is to take advantage of deals. You could see deals everywhere. Be smart enough to plan your shopping where you get the deals.

Look around you and see where you could find better deals.

Find ways to reduce your expenses

When inflation comes, the first thing that comes to mind is how to manage all the expenses. It is the sobbing story of every middle-class family to manage all the expenses in a tight budget. During inflation, since everything becomes costly, choosing which one to buy and which one to skip becomes harder.

Keeping in mind about your monthly budget, you have no other option but to trim down your expenses.

When you are desperate, you find out ways to reduce expenses. One way is to use the coupons and promo codes. They come in handy while shopping groceries.

The next way is to compare prices of the product before you purchase. For example, I always prefer to compare prices of products both in online and offline. I do the research before I make the purchase. Different stores put a different price tag on products, keeping a check helps you save money.

The next best way to reduce your expenses is to keeping a track of the spending habits. Where and how much are you spending? Is buying a particular thing necessary? Is it exceeding your budget?

These are a few ways that can help you in managing your monthly expenses during inflation.

Invest

If you have some decent amount of savings, you may consider investing in low risks government bonds. I believe the best way to invest is building assets. Assets like real estate, gold and some high yielding stocks will grow in value over time.

At the time of inflation, if you are facing financial issues, these assets will be your the cushion.

Always research properly before you invest your money anywhere.

Focus on long-term savings

Our savings are constantly affected by the forces that are not in our control. Just after the pandemic, the recent Russian-Ukraine war has deeply pained the wallets of a layman by inviting the inflation.

People are having a hard time understanding and evaluating what investment opportunities can bring them a better return.

By seeing the volatile market, I don’t feel safe to invest my money in stock. But how about if you look at the long-term saving goal?

FDs are certainly safe, but they are not a great way to generate wealth. Options like PPF, NPS, Corporate Fixed Deposits, Real Estate are great for securing your money for long-term.

Many find some evergreen niche business a good way to invest as a long-term financial goal.

Final Words –

Inflation is like a ticking bomb. It’s always wise to be prepared financially. Start savings early.