Yahoo Finance 6 Smart Ways To Save Money in an Inflationary Economy
It’s not just in your mind: Costs have sky-rocketed in the last few years. You might look at your monthly budget and feel like it’s impossible to save under these conditions.
But thankfully, experts have some recommendations to share that can help you stay on track with your financial goals.
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“Cutting back where you can and being strategic about your spending habits are some of the most basic yet effective ways to save money during inflationary times,” said Carter Seuthe, CEO of Credit Summit Debt Consolidation.
“Go through your monthly budget and see where you could cut back,” he advised. “Are there a few streaming services you could subscribe from? Can you dine out less often?”
Here are six smart money moves you can make today to start saving more.
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Cut Down on Grocery Bills
One of the easiest ways to save money during inflationary periods is to strategically cut your grocery bills, said Jake Hill, finance expert and CEO of DebtHammer.
“For example, I started meal planning last year to help me shorten my grocery list and avoid impulse buys. Even with higher prices, this change helped me keep my food expenses under control throughout the year,” Hill said.
Ann Martin, director of operations at CreditDonkey, observes that grocery prices are one of the most difficult things to navigate during inflationary periods, but tweaking your shopping plan can help.
“I like to plan my grocery list around my local store’s weekly circular,” Martin said. “If some of my go-to essentials are on sale during a particular week, I’ll make sure to buy extra. I also love the idea of meal planning based on your favorite supermarket’s weekly deals, especially if you are feeding a family.”
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Shop Around
“I have found the best way to save money on needed goods, when things in general are costing more, can just be to shop around,” said David Kemmerer, CEO of CoinLedger.
“For instance, I will sometimes need to purchase meat and produce for the week at different stores depending on which has the best deals and lowest prices this week,” he explained.
“That might change next week, so it’s important to keep an eye on relevant apps — which also tend to be great sources of coupons.”
Stick To a Budget
“It might not be the most fun task you can do, but setting a budget, especially in an inflationary economy, and then sticking to that budget is going to help you save money,” said Daivat Dholakia, VP of operations at Essenvia.
To do so, he recommends cutting out the extra activities that cost you money and replacing them with as many free activities as you can.
“Just because you want to spend time with your friends does not mean that you need to go out to expensive places,” he said. “You can still have a great time and not spend any money at all. Setting a budget helps you get your priorities straight and identify the places where you’re wasting money. Sticking to that budget will help you save money.”
Diversify Your Savings Into Assets
One money move you can make in an inflationary economy — where prices continually rise and erode purchasing power — is to get smart with your saving strategies.
According to Dennis Shirshikov, head of growth at Awning, one non-standard but effective approach involves looking beyond traditional savings accounts, which often fail to keep pace with inflation, and considering investing in assets that historically outperform inflation — such as certain stocks, real estate investment trusts (REITs) or even commodities.
“Diversifying your savings into these assets can provide a hedge against inflation,” he explained.
For example, he says investing in dividend-paying stocks can offer a dual benefit.
“Not only do these stocks have the potential for capital appreciation, but they also pay dividends, which can provide a steady income stream that may increase over time, often at a rate that outpaces inflation.”
It’s a strategy that, while it involves more risk than a savings account, can significantly enhance your financial resilience against inflation.
He says another method is utilizing high-yield savings accounts and certificates of deposit (CDs) from online banks, which typically offer higher interest rates than their brick-and-mortar counterparts.
“Though still not likely to outpace inflation fully, they can mitigate its impact on your savings,” he added.
Get Savvy About Tax Planning
One of the smartest ways to save money during these times is through efficient tax planning, said David Brillant, tax, trust and estate lawyer at Brillant Law Firm.
“Utilizing strategies such as income shifting or timing deductions can significantly reduce taxable income, thus conserving more of your earnings,” he said. “For instance, my experience with aiding clients in shifting income to family members in lower tax brackets has proven to be an effective method in reducing the overall tax burden, which is critical during inflationary periods when every dollar saved counts even more.”
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Optimize Your Insurance Coverage
Another crucial approach to save in a high inflationary economy, according to experts, is to optimize your insurance coverage.
“Amidst rising prices, it’s tempting to cut down on insurance premiums; however, this can be counterproductive,” said John Crist, founder and CEO of Prestizia Capital Group. “Instead, conducting an annual insurance review has enabled our clients to fine-tune their coverage, ensuring they’re not over-insured in areas less critical and adequately protected where it matters most.”
He says that by reevaluating property and liability insurance specifics, several of his clients have adjusted their coverage, resulting in significant cost savings without compromising on essential protection.
Another tactic Crist recommends is leveraging higher deductibles. By opting for a higher deductible, for instance, you can substantially lower your premium costs.
“Of course, this means being prepared to cover a larger payment in the event of a claim, but for many, the annual savings on premiums outweigh this potential cost,” he said. “This strategy has been especially helpful for our clients in less risk-prone areas or those with a strong financial safety net, allowing them to reduce insurance costs while still maintaining comprehensive coverage.”
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This article originally appeared on GOBankingRates.com: 6 Smart Ways To Save Money in an Inflationary Economy
