How to Survive Inflation in 2023

How to Survive Inflation

Inflation is a painful experience – it’s like being stabbed in the back repeatedly by someone you thought was your friend. When inflation hits, it takes everything you have and then some. But if you’re smart, you’ll know how to survive inflation and make it less painful. 

You can survive inflation in 2023 by sensible planning and making smart choices. You can also cope comfortably by creating a budget and sticking to it, cutting unnecessary expenses, reducing your debt, and investing in assets that are more likely to retain their value. 

Inflation is a reality that we face every day. In this article, I’ll share some strategies to help you survive inflation and get through these challenging times. 

1. Take Steps to Reduce Your Expenses 

An excellent way to deal with inflation is to get back to basics. You can lower some of your expenses by reviewing your bills and eliminating unnecessary items while negotiating the remainder. Cut down on costs by tackling the small stuff first. Go after valueless spending, things you might even consider unnecessary.

Pick one item from your expenditure; if you can’t decide whether you need it, you probably don’t need it. 

You should also take a close look at the subscription services you’re paying for and determine whether or not all of them are entirely necessary. Some of those subscriptions or memberships may not be as important as you thought. For example, there’s no point in paying a hefty gym membership fee if you haven’t set foot in the gym for months!

You can track these down yourself or utilize a subscription-tracking tool like Rocket Money. With Rocket Money, you can manage your subscriptions easily. This tool can help cancel unwanted subscriptions, keep an eye on your spending, and get bank fee refunds. It can also help you negotiate your cell phone and streaming charges and give you a better understanding of your bills.

Here are some other ways to reduce your expenses during inflation:

  • Analyze your energy consumption at home and cut costs where you can. This is a good way of saving money even if you’re broke.
  • Spend less at the grocery store by shopping wisely. Also, a good rule of thumb is to avoid shopping when you’re hungry. If you do, you’re more likely to splurge on food you don’t need.
  • Explore different options for your necessities, including mobile phone and internet plans, insurance policies (home, auto, health), and banking services.
  • Organize your errands to reduce your driving time as much as possible. 

2. Set a Budget and Follow It

Inflation is a constant threat to your finances. As the cost of goods and services continues to rise, it’s crucial to have a budget to ensure you’re not going overboard. Not only will adhering to a budget help you save on costs, but it will also help you stay flexible as prices change over time. By setting a budget, you’ll be better equipped to handle inflation and stay afloat.

setting a monthly budget

Budgeting is an integral part of controlling your spending. By creating a budget, you’ll be able to identify essential expenses and where you can cut back. In addition to saving money, budgeting can help you stay on the right financial track.

Many people view budgeting as an unpleasant task and a way to restrict spending, such as no more shopping or eating out at restaurants. However, budgeting doesn’t have to be a negative experience; it can be a rewarding experience that doesn’t leave you stressed out as long as you know how to do it right.  

Identify a Method for Budgeting

Use the following simple but effective methods to create, monitor, and track your budget:

  • A simple notepad and pen. The simplest and cheapest method for budgeting. Basically, you write down all your income and expenses and see if they balance.
  • Digital budgeting apps. Budgeting apps can help you create and maintain a budget. These apps can also help you understand your spending habits and make better decisions about how to spend your money.
  • Spreadsheets. A spreadsheet is an excellent tool for organizing information and performing calculations. Many websites offer free Excel budgeting worksheets, so you don’t have to create your own, saving you time and effort. 

3. Pay Off Your Debts as Soon as You Can

As inflation increases, so does the cost of living, and your debt becomes more difficult to pay off. To survive inflation, you should pay off your debts as soon as possible. Maintaining this standard will help you avoid being overwhelmed with obligations.

For example, if you’re left with more money than usual at the end of a particular month, consider using that money to pay off an outstanding loan. Otherwise, you may end up spending the extra money on something unnecessary.

Another important note: put your credit cards aside. It’s best to avoid using your credit card for everyday purchases. Before you realize it, you’ll have even more debt! 

Generally, interest rates will rise if inflation rises. Therefore, for those carrying month-to-month balances, this is not good news. This also means the interest rate on your credit card loans could rise, which is another reason you should avoid using it as much as possible. 

4. Set Aside Funds for Investing

As inflationary pressures continue to mount, it becomes increasingly important to set aside funds specifically for investing. When selecting investments, focus on those with long-term value and are more likely to hold their value during periods of inflation.

money grows

For consumers, higher prices due to inflation may lead to spending restrictions to keep expenses low. However, for an investor, your money losing value is more likely to be a significant concern.

The following investments can help you protect your money from rising inflation while making a profit at the same time.

How to Profit From Inflation

Inflation has several negative consequences, but the most apparent effect is that it will devalue your money over time. The value of a dollar will decrease as inflation sets in, but the general increase in prices can benefit you as an investor if you know how to profit from inflation.

As prices rise, here are four ways to manage inflation:

Invest in Real Estate

Investing in real estate is a good idea because it’s not as volatile as stocks, bonds, and crypto. It’s also a relatively stable investment regarding cash flow and growth potential.

Additionally, real estate is a long-term investment that will continue to benefit you even during a volatile market. In today’s economy, ensuring your investments are as stable as possible is critical.

As inflation rises, the value of your property will increase without affecting your mortgage costs.

Read here how to invest in real estate with little money!

Invest in Commodities

Commodities describe natural resources like oil, gas, gold, and silver, which are traded on global markets. While some are used exclusively for industrial purposes, others are considered valuable investments essential to the economy and indispensable in international trade. 

When the demand for raw materials increases (and when it becomes more expensive to make these raw materials), their overall prices increase. Raw materials are essential for many things, including building homes, packaging for businesses, and much more. So when their prices increase, it’s a big deal.

Because of their importance and rising value during times of inflation, they are an excellent choice for investors looking to protect their portfolio value.

Also, when investors feel uncertain about the future, they tend to flock to commodities as a safe option because commodities are seen as a more stable investment than stocks or other financial assets. 

This is certainly true, but it’s still important to only invest an amount you can afford to lose because you never truly know what will happen to the value of raw materials in the future. You can say the same for all investments.

Invest in Treasury Inflation-Protected Securities (TIPS)

Treasury Inflation-Protected Securities (TIPS) are bonds supplied by the US government. Their values rise and fall according to inflation. In other words, TIPS offers a guaranteed return, regardless of inflation levels. They are thus a popular investment choice for those concerned about inflation’s effects on their savings. Unlike traditional fixed-rate bonds, TIPS are periodically adjusted for inflation. 

You can purchase TIPS directly from the government website, But like other investments, you may also go through a broker of your choice. However, be aware that this comes with extra fees, so it’s best to invest directly through the government website (once you know what you’re doing).

Invest in Series I-Bonds

Series I bonds are inflation-adjusted savings bonds issued by the Treasury with fixed interest rates. As opposed to some U.S. securities, Series I bonds are traded at face value. 

If you’re looking for a safe, low-risk investment and wondering how to profit from inflation, Series I bonds may be the perfect solution. These bonds are guaranteed by the United States Treasury Department and have a fixed rate of interest that is payable semi-annually.

As long as the bond remains outstanding, you will continually earn your original investment plus any interest accrued since the issue date. Series I bonds have no hidden costs or fees, making them a good option for those looking to protect their assets while earning income periodically.

5. Increase Your Income if Possible

The main problem with inflation is that there isn’t a matching salary increase. This means that your purchasing power decreases over time, as salaries don’t keep up with the rising prices, leading to financial hardship as you struggle to make ends meet.

increasing income

Boosting your income is, therefore, a significant step to surviving inflation in 2023. If you can find ways to bring in more money, whether through a raise at work or by starting a side hustle, you’ll be in a better position to cover the increased costs of goods and services. 

Saving and investing your extra income can help you build wealth over time, protecting you from the effects of inflation.

Finding ways to supplement your regular income can soften inflationary periods. A little extra to supplement your regular income will make all the difference between getting by and getting in trouble.

You might be able to increase your income by:

  • Reducing your clutter by selling what you don’t need. Several online marketplaces allow you to sell items you don’t need, including eBay, Facebook Marketplace, or Craigslist.
  • Negotiating for a raise at work. This could be the fastest way of raising your income but the hardest. Even though it is challenging to get an increase overnight, you’re still in a good position to negotiate for better pay. Don’t be afraid to point out inflation as a reason.
  • Establishing a small business. To develop a small business, it is necessary to have a good business plan that includes market analysis, a marketing strategy, and a financial plan. The market analysis should include information on the target market, the competition, and growth potential.

You can also consider renting your stuff or a spare room to earn regular income on sites like Airbnb, Outdoorsy, RVshare, and BabyQuip.

You can also follow some of our guides on how to quickly make some extra money:

6. Keep Saving for the Future

Set aside money for savings. Protect yourself from inflation by saving even a little bit every month. When inflation rises, your money’s purchasing power decreases. As a result, you may need more money to maintain the same standard of living. Thats when you need an emergency fund the most.

If you have $100 in savings this year and inflation increases by 3 percent next year, you’ll need $103 just to keep up. By saving regularly, you can ensure you have enough money to cover rising costs.

Saving every month might mean you need to cut down on certain things, such as monthly subscriptions (like I mentioned earlier). It will seem difficult now, but you’ll thank yourself in the future when you’ve managed to save money to combat the rising cost of living.

Although saving for the future is well and good, you should prepare your family for dips in the economy courtesy of hyperinflation. Don’t wait until unforeseen circumstances strike – start saving now so that you’re fully prepared for any possible instances of hyperinflation in the future. 

Keeping with the theme of preparation and saving, let’s look at some things you can buy before hyperinflation hits.

What to Buy Before Hyperinflation Hits

If you’re not entirely aware of what hyperinflation is, it’s essentially inflation, but with prices increasing more rapidly. 

For example, the Cato Institute reported that in Zimbabwe during 2007 and 2008, prices shockingly doubled within a day, not weeks or even months. A more recent example is Venezuela. In 2018, Venezuela’s currency lost 99.9% of its value rapidly. These are examples of hyperinflation.

Currently, the U.S. is experiencing its highest inflation index in years; therefore, it’s better to be prepared and see what to stock up on in the event of hyperinflation. When hyperinflation hits, nothing matters except spending your rapidly declining currency into anything of lasting value. In such a scenario, practically anything that is non-perishable becomes valuable.  

In times of hyperinflation, the value of your unspent savings depreciates quickly, reducing your purchasing power. The best course of action would be to purchase essential items immediately because, with rapidly increasing prices, you might not be able to afford these items. Focus on bare necessities when thinking of what to buy before hyperinflation hits.

Here are the basics you should buy before hyperinflation hits:

  • Canned foods. As hyperinflation begins to take hold, it becomes difficult to afford basic necessities like food. Canned foods are a great way to stock up on non-perishable items that can last for months or even years. 
  • Freeze-Dried Foods. Freeze-dried foods have been dehydrated at low temperatures, meaning most of the moisture is removed. As a result, you can store them for long periods without them going rancid. 
  • Dry goods. Before hyperinflation takes hold, you should have a stockpile of dry foods. Examples include beans and powdered milk. These items have a long shelf life. Plus, having a supply of these staples on hand will help you weather any potential economic disruptions and keep your family fed during chaotic times.

Other items you should buy before hyperinflation hits:

  • Basic household items. Paper products like paper plates, paper towels, and toilet paper.
  • Personal hygiene products. Soaps, detergents, lotions, toothpaste, and diapers.
  • Medicines. It’s good to stock up on medicines even when there isn’t hyperinflation. 

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