{"id":99375,"date":"2022-08-22T13:00:00","date_gmt":"2022-08-22T10:00:00","guid":{"rendered":"https:\/\/www.bondora.com\/blog\/?p=99375"},"modified":"2022-08-22T13:00:00","modified_gmt":"2022-08-22T10:00:00","slug":"5-ways-to-save-money-while-inflation-is-rising","status":"publish","type":"post","link":"https:\/\/goandgrow.eu\/en\/blog\/5-ways-to-save-money-while-inflation-is-rising\/","title":{"rendered":"5 Ways to Save Money While Inflation is Rising"},"content":{"rendered":"\n

In May 2022, the average inflation rate in the EU reached a staggering 8.8%. While in France it didn\u2019t exceed 6%, the 20% inflation rate in Estonia or the 15% one in the Czech Republic makes one wonder \u2014 will the situation stabilize?<\/p>\n\n\n\n

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5 ways to save money while inflation is rising.<\/em><\/figcaption><\/figure><\/div>\n\n\n\n

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Here is the thing\u2014whether it\u2019s 6% or 20%\u2014a growing inflation rate means you can buy less with the money you have.<\/p>\n\n\n\n

With this current economic situation, you might ask yourself: \u201cIs it the right time to save money?\u201d Indeed, it is. The longer you keep your money sitting idly in a bank account or in cash stashed under your mattress, the more you lose to inflation every day.<\/p>\n\n\n\n

So, what can you do now to offset the negative impact inflation has on your wallet and, ultimately, your life goals? Let\u2019s take a look:<\/p>\n\n\n\n

<\/a>Saving money when inflation is rising<\/h2>\n\n\n\n

Rampant inflation means that the price of everything increases. You are forced to spend more money on insurance, mortgages, as well as essential expenses, like groceries, and water and energy bills. This all means you have much less money to set aside for saving and investments now than in the past.<\/p>\n\n\n\n

For those who don\u2019t have any financial buffer, a high inflation rate means less stability, more emotional discomfort, and a more unpredictable environment to live in.<\/p>\n\n\n\n

To get through tough times with less financial stress, you should save for emergency situations and, if you have some excess money, invest it before it gets devalued.<\/p>\n\n\n\n

\"May<\/a>
May 2022 inflation statistics on statista.com<\/em><\/a><\/figcaption><\/figure><\/div>\n\n\n\n

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Here are 5 tips that can help you to implement both saving and investing strategies:<\/strong><\/p>\n\n\n\n

1. Build an emergency fund<\/h3>\n\n\n\n

Creating an emergency fund is a good way to prevent bad financial situations when unexpected expenses come up. Imagine your insurance or electricity bill suddenly goes up, but you didn\u2019t account for this when budgeting. When inflation is high, these situations tend to arise more often.<\/p>\n\n\n\n

To create a financial buffer (AKA an emergency fund), you should set aside a certain amount of money every month. But what amount is the most optimal? Well, your emergency fund should cover at least three months\u2019 expenses, if you were to lose your regular income.<\/p>\n\n\n\n

\"Napkin
Napkin finance shows it\u2019s not that difficult to set up an emergency fund.<\/em><\/figcaption><\/figure><\/div>\n\n\n\n

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The size of your emergency fund depends on your current life situation\u2014whether or not you have family members to support, a mortgage to pay, and the level of psychological comfort you need.<\/p>\n\n\n\n

Once you have evaluated the right amount you need to set aside, it\u2019s time to think of how much money you can save.<\/p>\n\n\n\n

To start building your fund, keep in mind your monthly savings goal and transfer the necessary amount to your savings or investment account every month, before you spend money on other expenses. Read our Emergency Fund 101 article for more helpful tips.<\/em><\/a><\/em><\/p>\n\n\n\n

2. Continue investing<\/h3>\n\n\n\n

If you have invested some money in the past\u2014whether in bonds or property\u2014great! But you don\u2019t have to stop there.<\/p>\n\n\n\n

When thinking of new ways to invest your money, calculate the return on investment necessary to, at least reasonably, offset the negative impact of inflation. For example, if inflation is at 6%, you\u2019d look for some investment products that would give you at least 6.5-7% in return.<\/p>\n\n\n\n

However, as in some countries, inflation is currently far over 10%, it\u2019s becoming increasingly difficult to find investment products that can offset such a high inflation rate. In these cases, finding investment products that give you the highest returns and align with your risk appetite will help you minimize losses.<\/p>\n\n\n\n

Always keep in mind your ROI and avoid investing in things that quickly lose their initial value\u2014such as buying a brand-new car or investing in refurbishing an apartment.<\/p>\n\n\n\n

3. Spend less<\/h3>\n\n\n\n

Experts claim you can save more only by changing two things \u2014 spending and earnings<\/a>.<\/p>\n\n\n\n

Earning more often means getting more qualifications and experience and investing effort and time in finding new projects. In contrast, by cutting spending, you can see the effect much faster. So, how can you spend less without hurting your standard of living?<\/p>\n\n\n\n

To start, make an Excel sheet where you can list all the financial information from your bank accounts. The idea here is to understand the key categories of expenditure and evaluate where most of your money goes.<\/p>\n\n\n\n

The next step would be thinking of the products or services that you can stop spending money on. Here are some things you could cut:<\/p>\n\n\n\n