How to Manage Your Money Wisely During Inflation?

Tips to Manage Money

Manage Money During Inflation

Regardless of financial status or situation, inflation can dramatically change the way your money works for you. Even the most organized budgeter can find themselves faced with the reality of having to reassess their strategy and implement changes. With the Consumer Price Index showing an increase over 8 percent in the last year, it is easy to see how budgets and financial planning can suffer massive damage. Among the highest increases for consumers has been food, up by approximately 11 percent in October over September 2022. It’s important to proactively manage money wisely by pivoting from your financial plans. Continue reading for more information on how to manage your money wisely during inflation.

Managing Your Budget

One of the most important ways to get a handle on your finances and manage your money wisely during inflation is to put a budget in place that works. This might seem like an obvious statement, but creating a budget that is realistic for the needs of your household is essential to success, especially during inflation. Taking complete account of your income and your expenses is the best starting point. If you’re thinking that you already know what you make and spend. You might be surprised to find that there are a large number of small unexpected expenses that go unaccounted for in your budget.

Taking the time to write down every penny you spend and on what could reveal those hidden account drainers such as that frequent cup of coffee, subscriptions that you don’t regularly use, auto payments for services that you no longer need and even those little items you pick up at the grocery store that weren’t on your list. Taking an accurate accounting of where you spend your money, how much and how often could be very revealing. Set a budget in place with all of your expenses, including variable expenses, and decide if there are any items that you can cut back on or cut out completely.

1. Adjusting Spending

After determining actual spending habits, reducing spending can help reduce the pressure of inflation. Making adjustments based on the costs of services and goods will allow you to handle the changes in the economy and keep planning for your future. There are several areas to tackle when reducing spending that will have a major impact.

● Groceries

Trips to the grocery store during inflation can be one of the highest expenses for consumers. There are a few steps that you can take to reduce spending in this area.

  • Meal Planning
    • One of the best ways to keep your grocery purchases in-line is to plan ahead. Taking some time to plan meals for the week or weeks ahead will allow you to purchase only the items that you need.
  • Shop at Home
    • Many people overlook the pantry as a source of groceries. When meal planning, turning to your current supply of foods is an excellent way to save money. Take stock of what you have and work with that first.
  • Sales and Coupons
    • Shopping the grocery store flyers for sale items and making your meal plans based on these items can help cut back on the grocery bill. Taking advantage of paper and online coupons as well as rewards programs can also keep the bill down.
  • Bulk Purchasing
    • For staples that you purchase frequently, bulk purchase could be a money saver. The prices are often less per unit when purchased in larger quantities. This also reduces the number of trips to the grocery store saving time and fuel.
  • Order Groceries for Pickup
    • It’s easy to overspend at the grocery store by picking up impulse items along the way to the cash register. By ordering your groceries ahead of time for pickup you avoid the walk around the grocery store and the temptation to put unnecessary items in the cart.

● Fuel

Avoiding high fuel costs can be challenging, particularly if you work outside of the home, but it is possible to lower those expenses.

  • Seek Out Lower Prices
    • There are several apps and computer search options to find gas stations that provide lower rates nearby your location. While you will need to search each time you head to fill-up because the prices change regularly, this can provide you with better gas prices.
  • Membership Cards
    • Most gas stations offer a membership or club card that provides the members with discounted gas prices, rewards and perks. Choosing one or several of these memberships could yield some savings.

● Utilities

  • Reduce electric and water bills by changing the way you use them.
  • Automate heating and cooling equipment so that the temperatures don’t fluctuate causing the units to turn on and off frequently.
  • Choose telephone plans that are less expensive or prepaid.
  • Consider switching from cable to streaming only the apps that suit your viewing needs.

● Entertainment

  • Consider staying in rather than going out to dinner and a movie. Make a nice meal such as a homemade pizza and rent a movie or pull out a movie you haven’t seen in a while.
  • When planning an outing to zoos, movies, theaters, amusement parks, museums or other entertainment seek out discount tickets. Some local municipalities and libraries offer discount tickets to residents during certain times of the year.
  • Instead of going away on vacation, consider a well-planned stay-cation that has local attractions and entertainment on the itinerary. Get to know your area by planning day trips that spend less but offer a great time.

2. Start An Emergency Fund

The unpredictable economy and high inflation make it all that much important to have an emergency fund reserve set aside. Over half of the Americans participating in a January 2022 survey revealed that they could not cover a $1,000 emergency. Considering the increased costs for nearly everything, it is important to have money set aside to offset any urgent need that might arise. A good goal for an emergency fund is 3 to 6 months of expenses. This will ensure that you have the funds you need during uncertain economic times. One way to fund this account is by cutting back on extra spending and adding those funds to your emergency fund instead.

Investing During Inflation

Choosing where to invest when inflation is on the incline can be challenging. There are investment options that can provide you with some safety when trying to manage your money wisely during inflation. Adding diversity to your investment portfolio is an excellent way to make sure you’re not putting all your eggs in one basket. The following are a few considerations:


Treasury Inflation-Protected Securities (TIPS) are a type of government bond that follow the ups and downs of inflation with paid interest increasing when inflation rises and decreasing during deflation. Investors can purchase TIPS in terms of 5, 10 or 30 years making them fairly accessible for a variety of investment levels. The investor is paid a fixed interest rate every six months until the maturity date. This interest rate is based on the adjustable principal amount and therefore the payments do vary. Upon maturity the investor receives the higher of the original principal amount or the increased principal amount based on inflation. This ensures that the investor is always going to either get their original investment back or more.

● Stocks

While you might think investing in stocks during inflation sounds risky, consumer staples stocks tend to do well during inflation since the prices continue to rise. These are stocks of companies that manufacture or sell products such as food, paper goods, health care items, hygiene items and the like. Combining purchasing stocks such as these with choosing companies that consistently pay dividends to their stockholders can produce decent returns.

● Commodities

Investing in materials such as metals, oil, and agricultural products can be a good investment if purchased as inflation is on the rise. That said, this can also be a risky investment as there is no guarantee that demand will stay high for a long enough period of time for the investor to capitalize. Taking care in investing funds that are somewhat expendable could be the best course of action in this situation.

The most important steps in weathering inflation are planning carefully, being intentional in your spending and making adjustments. In order to manage money wisely during inflation take the time to get a clear picture of your finances including your budget, investments and goals for the future. Be prepared to adjust your budget monthly based on the financial tone at the time.

If you are currently saving for retirement, continue to do so. Abandoning those long term financial goals will only prove to make handling tough economic times more challenging. Instead of giving up on investing simply review your portfolio and ensure that it is diversified. Learn more about the options available and consider which ones might be best for your goals. When the tides turn and inflation passes you can be financially stable and ready to adjust your finances accordingly.

About Shawn Manaher 1 Article
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more. He loves to share his personal finance tips and money management wisdom with others on his website,, to help them find financial freedom.

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