Budgeting During Inflation: 4 Tips for Frugal Living

Inflation can cause budgeting to become a huge challenge. It’s important to stay frugal when possible to help combat some of the potentially detrimental effects of a higher cost of living. In this post, we’ll discuss some tips on how to stay on budget and keep your finances healthy.

What is Inflation?

Inflation occurs when the overall price of goods and services over a period rises, while the average income stays the same and as a consequence, your purchasing power decreases. This is due to the fact that the money itself loses value because more and more is required to buy the same goods. 

This affects your budget by lowering the power your salary has to buy the things you need and desire. Overall, you’ll be spending more for the same commodities. In addition, there is a risk to your savings and investments because the prices may rise faster than the returns on your investments. 

Make a Plan

Start fighting back at inflation by making a set plan. Always look at your current budget and how it’s currently being affected by global and national changes. Write down exactly what is going in and out of your accounts all month long. 

Ask yourself the hard questions. Where are the weak spots that are draining your funds? Are you vulnerable to spontaneous purchases? 

Some of the biggest goods that inflation affects in daily life are gas, food, cars, and travel fare, so pay extra attention to spending in these areas. Once you’ve identified a pattern, make a fixed budget for the coming months to help counterbalance the effects of inflation. 

Look For Deals

Cutting back on unnecessary expenses can assist you in rebuilding your budget. For example, look around for the best deals and coupons for groceries, hygiene products, and other daily essentials. Choose a day to plan your meals for the week to cut down on excess spending and pick only a few days in advance for designated spending at restaurants or cafes. 

If your transportation is causing a dent in your money, check out rewards programs, carpooling, or biking when you go to places near your home. You may also benefit from turning down the air conditioning or heat when it’s not necessary, keeping showers short, and always turning off unused lights. 


It may seem scary to invest when inflation is on the rise. However, markets are always unpredictable to some extent, so it’s important to keep contributing to your financial goals. Ultimately, proper investments create more personal economic power, so continuing to invest wisely can actually help combat inflation.

Boosting your portfolio with low-risk dividend-paying stocks can help potentially protect you from inflation. This type of stock distributes a small part of a company’s overall earnings to people who have invested. Investors are usually paid regularly, such as once per quarter, with the top investors with the highest returns. 

You can also try Series I savings bonds. These are interest-generating government savings bonds that have a fixed interest and variable inflation rate that earn interest for up to 30 years. The interest rate is adjusted for changes in the Consumer Price Index and is paid once the bond is redeemed.  Together, this very low-risk investment helps protect your investment from inflation.

Stay Informed

Keep reading about the economic climate like the global economy, stock market, political and social changes, and other current events. Don’t neglect your local news either, as changes in your immediate government may affect you even more. 

You can also vote for the decisions you agree with and visit the city council to be an active participant in your area. By staying informed you make more educated choices that will benefit your personal and community finances over time.