5 Money Moves Experts Make When Inflation Is High

The most recent Consumer Price Index (CPI) report puts the annual inflation rate at 9.1%, up from 8.6% the month before. That’s nearly five times the sub-2% rate that the Federal Reserve considers normal.

With prices rising five times faster than they should be, how can families, households, savers, spenders, shoppers and investors possibly keep up?

GOBankingRates asked a variety of experts for their best tips on how to survive and even thrive as the dollar’s buying power continues to crater.

Follow these tips to weather the storm.

GOBankingRates spoke to several experts who all said the same thing — start by revisiting your budget. Many Americans adjusted their spending plans during the pandemic, which was a wise move. Now the smart move is to check in once again — inflation has almost certainly rendered your previous spending irrelevant.

“Comparing your monthly income to your monthly expenses might help you identify places where you may be able to save money, such as at the grocery store, ordering less takeout or canceling your streaming service membership,” said Andrew Priobrazhenskyi, CEO of DiscountReactor.

According to CNBC, nearly half of all Americans are taking on additional debt to help them keep up with the rising cost of just about everything. If you’re already on a shoestring budget, you might soon have to join the masses who are taking out personal loans or leaning on credit cards to make ends meet.

Interest rates are rising — you have inflation to thank for that, too — so borrowing is already more expensive. The last thing you need is to pay even more because you let your credit score slip.

“Inflation has the potential to impact all industries and will impact all Americans,” said Carl Memnon, co-founder and COO of the credit-alternative platform Grain. “Inflation could hinder the progress of those trying to pay off debt or build credit. To keep your credit positive, set up autopay so you never miss payments and your providers can report positive payment history. Having access to a safe, sustainable line of credit can help all Americans pay for everyday expenses and keep their cash flows positive.”

The Fed has been aggressively raising interest rates all year, which is bad news if you’re borrowing but good news if you’re saving — depending on where you bank, that is. People typically shop for savings accounts, find one they like, park their money in it and never look back.

Now’s the time to change all that.

“It’s important to ensure that consumers do their best to keep pace with inflation,” said Gary Zimmerman, a former investment banker and the CEO of MaxMyInterest. “A good place to start is looking at your savings account.”

Although interest rates are up, some banks are flush with cash and don’t need to raise yields to incentivize deposits. Other banks are paying their depositors much more than they were last year, when the average yield was a paltry 0.06%. According to Forbes, some banks are now paying more than 1.5% or even 2% yields. If you haven’t checked what your bank is paying you recently, now is the time.

“Making sure you’re always earning the highest rate possible is increasingly important as rates rise, since not all banks will increase interest rates at the same pace,” said Zimmerman.

The stock market is in bear territory and the crypto winter is still in a deep freeze — but that doesn’t mean that there’s no way for investors to make money in these trying times.

“Inflation is likely to be an ongoing problem for quite some time,” said Sean Burke of Stuart Estate Planning. “If you are an investor, you can look at inflation-protected bonds.”

Series I bonds, for example, earn interest according to a fixed rate and an inflation-adjusted rate. If you buy them through October, you’ll lock in an impressive rate of 9.62% for six months.

Treasury Inflation-Protected Securities (TIPS), are another alternative. TIPS adjust the principal to keep pace with inflation, not the interest rate.

Precious metals like gold have long been a popular hedge against inflation because they derive their value differently than currency and stocks. Also, as Reuters points out, gold historically resists inflationary pressures because it doesn’t correlate to the CPI.

“An excellent middle-risk investment is precious metals,” said Lorraine Daisy Resuello, CMO of Connection CoPilot. “Gold bullion provides novice investors more options to beat inflation and reduce investment risks.”