How to Survive Inflation

What Is Inflation?

Inflation is the measure of rising prices over a period of time. Economists determine inflation by comparing price indexes that group and track the cost of select items.

One of the most widely used measures of inflation is the Consumer Price Index (CPI), which is calculated by the U.S. Bureau of Labor Statistics and measures how the cost of a "basket" of consumer goods and services paid by urban consumers changes over time. The groups within the basket include food, housing, transportation, medical care and more. In the year ended May 2026, the index's rate of growth was 4.2%—helping to fuel inflation concerns.

As the cost of goods increases, purchasing power decreases. As an example, $1.00 in May 2016 has the same buying power as $1.40 in May 2026—meaning that you need to spend $1.40 today to buy what a dollar could buy 10 years ago.

How to Protect Your Money From Inflation

Avoiding inflation completely is impossible, but there may be some things you can do to minimize its effect on your finances.

First, it's important to differentiate between inflation that is short-lived and inflation that lasts over a longer period. Short-lived inflation can often be attributed to supply and demand issues that drive competition and temporarily raise prices. Lasting inflation is more gradual and based on a wider variety of factors.

While both types of inflation are difficult to avoid, your strategies for dealing with each may differ. The main way to survive the impact of long-term inflation is to increase your income or invest in a way that helps you grow your money faster than the rate of inflation.

Here are five ways to survive short- and long-term inflation.

1.Diversify Your Investments

For the everyday consumer, having investments and assets that appreciate is a great way to combat the impact of inflation. Since inflation often causes the value of money to decrease, positioning your money to grow over time means that—if your investments perform well—your dollar will ideally outpace inflation.

If you have an investment portfolio and/or a 401(k), individual retirement account (IRA) or other retirement account, you'll want to make sure your investments in those accounts are diversified among stocks, bonds, index funds and other investment vehicles with varying levels of risk. Talking to an investment advisor or your company's retirement account representative can help ensure you've got a good balance of investments that will ideally outpace inflation while also mitigating your risk.

Outside of your investment portfolio and retirement account(s), picking the right investments as a hedge against inflation will require some research. Many investors believe investing in gold and silver is a good bet as they are known to hold their value well.

Investing in real estate can also be a good strategy if you have the means, because inflation also causes property values and rents to rise—a benefit for both homeowners and landlords.

2. Build an Emergency Fund

Outside of planning for the future with investments, one of the best ways to protect your finances is to always have reserve funds for when an emergency hits. An emergency fund is a designated savings account where you store extra cash for unexpected expenses.

While an emergency fund does not directly protect you from inflation, it can help you prepare for additional costs should temporary price fluctuations push you over budget. For example, if fuel costs surge due to market conditions, it could upend your monthly budget. Having an emergency fund in place could give you the breathing room you need until you have a chance to revise your budget.

If you have an emergency fund or are considering starting one, remember that storing your money in an account that earns interest could help you further protect your money from devaluation. Consider opening a high-yield savings account, which allows instant access to your money while offering higher interest rates than typical savings accounts.

3. Review Your Budget

Since both temporary and long-term inflation will impact the cost of everyday items, it's important for you to regularly revisit your budget to ensure you're accounting for price changes over time.

If a large part of your budget goes toward items such as gas, utilities and food that can be impacted by temporary price increases, consider ways to save money in these areas when you hear that inflation might be driving prices higher. For instance, you may be able to negotiate utility bills, cook at home more often instead of dining out or shop for lower prices on insurance.

4. Reconsider Large Expenses

If you're planning any large projects or purchases, such as home renovations or buying a new car, consider how inflation may impact the costs and whether any price increases are likely to be short-term or longer-term.

If you believe cost increases may be temporary, you could put off making the purchase until prices cool off. If you hear rumblings of inventory shortages in areas you plan to spend, on the other hand, you could either make the purchase immediately or start setting aside extra cash to cover possible price hikes.

5. Make More Money

As inflation increases and the value of your dollar decreases, it may become difficult to afford your typical spending. When you increase your income, although inflation may spike the cost of everyday items, you'll know you're bringing in more money each month allowing you to cover the incremental new cost. Asking for a raise, getting a second job, starting a side hustle or selling unwanted items online could all be options for increasing your cash flow and easing the bite of inflation.

The Bottom Line

Even when inflation isn't making headlines, you may feel its gradual impact on your budget, but taking the steps above can help keep your finances in good shape. An important part of protecting your personal finances over time is keeping tabs on your credit. You can get a free copy of your credit reports and scores from Experian to see where you stand. You may also want to consider Experian's free credit monitoring, which alerts you to important changes in your credit file that could signal fraud.