Personal Insights

7 ways to preserve your money during inflationary times

Use these tips to stay afloat when prices rise.

Managing money can be challenging enough under normal circumstances, with many Americans trying to make it from one paycheck to the next without running out. But the rising cost of food and other consumer items since the pandemic has made it even harder. In fact, the inflation rate reached a 40-year high in 2022. Check the U.S. Bureau of Labor Statistics’ Consumer Price Index site for the latest prices consumers are paying for food, fuel and other services.

In the face of such financial challenges, what can you do to retain control of your finances? Sarah Young, Regions Financial Wellness Relationship Manager, says: “There are three very important things that can always help: Budget, budget and budget.”

Here’s where to start with your budget—and six other essential things you should be thinking about.

1. Create a new budget and stick with it

The most tried-and-true financial step anyone worried about their finances can take is usually creating or revising a budget. “Many people don’t know how to budget,” says Young. “Others know how, but they tend to get relaxed about adhering to a budget.” Looking at your outflow versus your inflow of money can be an eye-opening exercise if you aren’t used to paying much attention.

The best budgeters pay attention to everything, including the seemingly modest daily expenses that can add up over time. For example, an $8 latte and $20 lunch each day add up to $140 during a five-day workweek, and $7,000 over the course of a year.

2. Control your debt

Excessive debt, especially high-interest-rate debt, can lead to a downward spiral that can be hard to escape. Though it’s often easier said than done, do all you can to control debt and try to avoid it when possible. Question any and all expenses that you’ll need to use credit to cover, especially those that you won’t be able to pay off within a short period of time.

Avoiding too much debt can be a key element of your budgeting practice. Exercise financial self-control and build good habits while keeping an eye on your debt level. As you save money or tackle your debt, reward yourself by buying a modest treat every now and then. That could help motivate you further as you make progress.

Depending on the amount of debt, mortgage refinancing may be a debt-reduction option worth considering, especially if your home’s equity has grown enough over time to eliminate the requirement for private mortgage insurance (PMI). Use this debt repayment calculator to enter different amounts and see the impact over time.

Pay your bills on time to avoid impacts to your credit score which could increase your costs for credit in the future. Just one late payment stays on your credit report for seven years!

Still struggling financially and having a hard time making ends meet? Check out the tools and resources Regions offers now for those facing financial hardships.

3. Save money when and where you can

Saving money can be a mindset as well as a disciplined practice. Here are a few tips that can help:

• Groceries: Don’t shop when hungry. Look for generic (no-name) brands, which use essentially the same formulas as the name brands but cost less.
• Restaurants: Cut back on eating out and instead cook more economical meals at home, including freezer meals and packing lunches.
• Energy: Use an energy-efficient thermostat, LED lighting, appliances requiring less energy and other energy-saving strategies recommended by the U.S. Department of Energy to reduce electricity use and costs.
• Health: Control your health-care costs by pursuing a healthy lifestyle. You can avoid many health conditions and costly doctor’s bills by eating a healthy, sensible diet, exercising regularly and sleeping well.
• Clothes: Look for discounts at retail outlet stores.
• Big-ticket purchases: Negotiate all large purchases, such as large electronics and major appliances. In a time of inflation, avoid as many of these purchases as you can.
• Subscriptions: From magazines to unused gym memberships, streaming subscriptions or additional cellphone features, only pay for those you actually use and cancel the rest.

Ask yourself: “Is this a need or just a want?” In other words, would you be fine without the purchase? The article, “10 ways to save money,” offers other smart savings tips.

4. Secure your income

While spending less money is important, maintaining and securing your source of income is important too. “Make sure you are adding value with your employer,” says Young. “During times of economic stress, employers may need to make job cuts. Add to your job security by showing up and demonstrating your worth at work.”

Look for opportunities to invest in yourself and upgrade your skills which could earn you higher wages. Also consider potential opportunities for supplementing your income with part-time work if allowed by your primary employer and if it works with your schedule and lifestyle.

5. Avoid the “make more, spend more” trap

When your earnings increase, it’s easy to think that because you earn more, that means you can spend more. Even if that’s true this month or next, it can be a dangerous trap to fall into, especially when saving the extra money earned could provide an opportunity to become more financially secure.

This is why it’s particularly important to pay yourself first when you get paid to move toward the goal of building long-term wealth—why many also save the difference if they get a raise or bonus.

6. Build your emergency savings

One of the basic building blocks of personal financial success is to build an emergency savings fund. It can serve as a buffer that can keep you from falling into debt when financial surprises pop up, such as a major car repair, a trip to the emergency room or a new furnace or other major home repair.

Aim to have emergency savings that could be used to pay at least three months’ worth of living expenses. Though that might sound like a lot of money, approach it as a monthly habit that you stick with through all financial ups and downs. You could even set up a monthly automatic deposit to your savings account. If you can’t see it, you won’t spend it.

If you’re ready for your money to work even harder for you over the long haul, this might be a good time to consider a certificate of deposit account or money market account. These products typically offer a higher interest rate than standard savings accounts and could allow you to reach your emergency savings goal faster.

Use this savings calculator to see how even a small amount can grow over time.

7. Avoid bankruptcy, the financial “nuclear option”

When times get tough, some people just give up and declare bankruptcy. At least it’s a way out of having to pay bills that seem impossible to pay. The big problem is that this quick-fix solution can leave you with a very long financial hangover. Your credit score, your ability to secure a loan, the interest rate that you’ll pay on that loan if you are approved and your record when applying for a job—they could all be affected.

“Before taking extreme measures, such as declaring bankruptcy or accepting a foreclosure, reach out to your creditors,” says Young. “Be honest. Be transparent about your situation. In many cases, they will be more likely to help you. After all, your creditors stand to experience a financial loss if you go bankrupt.”

As tough as these times can be, remember your financial ABCs: Avoid debt. Budget. And control your finances.

Four Things to Do

1. Review your spending for the last three months and itemize each purchase. What could be cut from your monthly budget?
2. Make an appointment with one of our bankers to develop a personalized Regions Greenprint® plan to help you build a plan — and the financial confidence — to reach the milestones that matter most to you.
3. Visit the Credit Resource Center to read an article, listen to a podcast or take a self-paced course on debt management.
4. Open a separate savings account for your emergency fund to avoid the temptation of spending it.