5 Ways to Safeguard Your Finances During Inflation

2 MIN. READ

Have you noticed that your purchasing power is down? You’re not alone. Inflation is up, resulting in higher costs for most goods and services.

At PFCU, we strongly advise taking proactive steps to safeguard your finances in times of inflation. Here are five inflation-proof strategies for better finances. We encourage you to take advantage of all the resources we offer to weather this inflationary storm.
 

Tip 1: Reevaluate Your Budget

Financial planning starts with a sound budget. With a yearly inflation rate of 2.5% recorded between August 2023 and August 2024, many goods and services continue rising in cost. Taking a hard look at your spending habits can pay off.

Budget reevaluation should include:
 

• Setting aside more money to cover essentials that are rising in cost.
• Balancing your budget by reducing discretionary spending if needed.

PS: The right banking tools can make setting a budget and sticking to it much easier! Take a look at the money management tool we offer.
 

Tip 2: Safeguard Your Finances by Optimizing Your Savings

Even though your savings grows over time, high inflation levels mean the money you saved is still losing buying power.

Exploring high-yield savings products should be a priority, and you should also look into inflation-protected securities like TIPS, where the principal value rises to match inflation.
 

Tip 3: Invest Wisely

Investment diversification is a smart way to approach inflationary periods. Because inflation can eat away at returns, you might have to focus on growth-oriented products and adjust your risk tolerance to build a portfolio that still manages to outpace inflation. In this context, diversification is one of the best inflation strategies for spreading risk.
 

Tip 4: Manage Debt Effectively

Smart debt management can lessen the impact of inflation on your finances. Prioritizing paying off high-interest debt will reduce the financial strain on your budget and free up money for other important expenses.
If you’re managing multiple debts, look into consolidation or even refinancing loans to access more advantageous terms and lower interest rates.
 

Tip 5: Shop Smart and Save

Take your buying power back with these smart shopping tips:
 

• Get into couponing and stock up on essentials when you can get a discount.
• Have you been eyeing a big purchase for a while? Use a price-tracking app to get notified when it goes on sale.
• Shop for household essentials in bulk since you’ll need these items later.
• Buy used when you can and look for ways to reuse or recycle items rather than buying something new.

Safeguard Your Finances From Inflation With PFCU

These simple but effective tips will help you maintain financial stability as we get through this inflationary period.

Need help adjusting your budget, growing your nest egg, or managing debt? The financial experts at PFCU are here to help! Contact us today for personalized banking recommendations or visit our nearest branch.