Beating Inflation: How To Protect Your Cash In An Economic Crisis

Discover how you can shield your finances against the rising tide of inflation.

Understanding Inflation and Its Impact on Your Finances

Managing your hard-earned money is extremely important, and it can be hard to keep your wallet full when prices rise beyond what you can afford. Thinking about the future takes a back burner when it's difficult to stay on top of your day-to-day expenses. The best way to start is to understand just what inflation really means for your savings and spending.

Inflation is a widespread economic issue that causes a general increase in prices while the purchasing power of money falls. When the prices rise, every dollar you own buys a smaller percentage of a good or service. This can mean that the money saved today could be worth less tomorrow, making long-term financial planning very challenging. Investing during inflation is difficult as it's harder to tell how well that investment will end up turning out. Even trying to bulk up your savings can feel impossible when you're worried about staying afloat. 

Thankfully, there are still some ways for you to protect your money and even earn some more. Some accounts financial institutions offer are designed like a safe: locking away some of your money and earning interest while you continue daily life. Others are there to discourage you from dipping into your savings by implementing limited withdrawals. And of course, there are several different types of loans or lines of credit if you're in need of some extra spending money for a project or event.

All of these are great examples of things that can help soften the blow of inflation, but it all depends on where your finances are sitting at right now and what's best for you. That's why we encourage you to take life by the horns and arm yourself with knowledge so you can anticipate and adjust your financial strategies during these tough times.

A Safe Haven for Your Money

With grocery and gas prices at an all-time high, it's hard to save money for later. High yield savings accounts can help with that. These accounts provide a higher interest rate than traditional savings accounts, which can help to counteract the effects of inflation. By earning more interest, you can maintain, or even increase, the real value of your savings over time. These accounts provide a way to set part of your money aside and earn interest while you use other methods like a checking or spending account to process transactions.

Some of these savings accounts, like Levo's Super Share, only allow you to have a few withdrawals per month, which can be a great incentive to keep your money untouched. They may require a certain deposit amount in order to open an account though, which is why it's important to know where you're at and research financial institutions around your area to see what they offer.

Generally, high interest savings accounts are a flexible yet efficient way to make your money work for you. By putting aside some funds and leaving them to earn interest, you'll be able to safely invest money in your future without risk and increase its value. 

Loan Options to Combat Inflation

Inflation can also affect loans and borrowing costs, causing interest rates and monthly payments to skyrocket. Credit unions usually have products that are designed to help you manage debt effectively even in periods of rising inflation. Doing research on the financial institutions in your area is a great way to see who has the lowest rates and best options for you. Certain loans can be a great opportunity to provide a hedge against inflation, such as a line of revolving credit or a small loan that can easily be repaid. It's important to look for loans that have low rates and fit in your budget, so you don't have to worry about debt.  

If you're having trouble making a payment on a loan you already have, check to see if the place you bank with provides repayment options. Some places may allow you to skip a payment, ensuring that loans remain manageable even during an unexpected hardship. Levo has something like this called Skip-A-Pay, though it isn't a feature available at every bank and credit union. Always call your financial institution if you're having a tough time making payments to see if they can do anything to help. There's usually some kind of assistance available, though it varies from place to place.

In short, loans can be helpful with shouldering some of your expenses, but it's important to know what kind of loan is best for your situation and whether or not it's affordable. 

Financial Planning to Outpace the Economy

Some financial institutions go beyond transactional services to offer personalized financial planning and advisory services. There's a team of experts in every financial aspect that can help develop personalized strategies for getting through inflation. Even if the place you bank with doesn't have an expert that can help you, there are financial advisors outside of banks who can help, and even robo-advisors run by AI that can assist you from the comfort of your home, such as Levo's EasyVest. By taking into account your financial goals, what you have to work with, and the current economic landscape, advisors can offer advice on investments, retirement planning, and other financial practices.

Otherwise, another great way to stay afloat during inflation is to budget your expenses yourself and keep track how much you're spending each day, week, or month and subtract that amount from how much you're earning to see what kind of wiggle room you have to work with if any. This is also a good way to see if you can decrease your spending by removing certain expenses you don't necessarily need. Examples of this would be things such as streaming services, in-app purchases, eating out, or even buying certain items from the grocery store. Less is more: the less you spend, the more you can save. 

The last method is to create a calendar for when your bills are due. Knowing when money will be taken from your account and how much will be taken will help you plan exactly how much you need to have in your account on those days, allowing you to put extra away in savings and ensure you always are able to make your payments in full and on time to prevent any extra fees. This also allows you to be able to time groceries and other big spending so that it won't interfere with your bills, giving you more control over your finances.

Rest assured you are not alone from the effects of inflation and there are always people who can help!