Top 5 Tips To Protect Your Money From Inflation

In a recent report by the Philippine Statistics Authority (PSA), the headline inflation rate in May 2024 was at 3.9%. This is a small rise from the 3.8% recorded in April of the same year. PSA noted that this could’ve been caused by the increase in housing and utility prices for the concerned months.

While the government promises to continue exploring ways to combat inflation and ensure commodities remain affordable, the rising inflation rates should serve as a wake-up call for you to be stricter and more mindful of your finances. While everyone has to deal with rising prices, being more conscientious about how you use your money can help lessen the effects of inflation on your daily budget.

Fortunately, there are many straightforward ways to shield your finances from economic impacts. Here are some tips on how to protect your money from inflation:

Open a High-Interest Savings Account

As inflation increases the prices of goods and services, it decreases the purchasing power of your money. Hence, what used to be enough money to buy your necessities and perhaps some luxuries becomes insufficient during times of high inflation. This could make you feel like you’re not getting the most out of your hard-earned income. One way to combat inflation’s effects on your money is to put it in a high-interest savings account so it can earn more over time. While this won’t fully make up for the inflation rate, your money will at least fare better than keeping it in a regular savings account.

To enjoy higher interest rates, you can open a savings account through a digital bank Philippines provider, which typically has higher rates compared with traditional banks. Maya, for example, has a product called Maya Savings that offers a base rate of 3.5% interest p.a. By using your Maya wallet to pay bills, make purchases, and buy prepaid load, you can boost that rate further up to a maximum of 15% p.a. daily. This can help your money keep up with inflation instead of just devaluing completely.

Avoid Unnecessary Spending

Times of high inflation call for stricter budgeting. If you had room for plenty of extras before, the same might not be the case now. So, make sure to review your spending habits and check which items can be lessened or removed entirely. Some examples would be monthly subscriptions that you aren’t making full use of anymore and constant food deliveries that often cost more than cooking your own meals at home. You’d be surprised at how many unnecessary expenses you actually have if you just review your card and bank statements closely.

In addition, track your spending in detail. Even those small expenses that you don’t really think much about can easily build up over time. Being more aware of where your money goes through detailed budget tracking can help you trim the fat, so to speak. Remember, every peso counts!

Take Advantage of Rewards, Cashbacks, and Other Promotions

As inflation rates continue to rise, it’s inevitable that your purchases will end up costing a lot more than usual. Even the most basic necessities like food products and hygiene items can be surprisingly expensive. So, if you’re going to spend anyway, do so while taking advantage of rewards and cashback systems offered by your bank or card provider. For example, use your credit card for groceries instead of paying cash. By paying the balance in full later on, you’re able to build up reward points with your card without accumulating interest on your card purchase.

Also, be on the lookout for e-wallets like Maya that can offer you bonuses for frequently using their services when making purchases or paying bills. The more you use your wallet to pay for your bills and purchases, the bigger the rewards you can earn. There are also credit cards that have partnerships with grocery stores or gas stations, which can offer you more savings. Through these methods, you’ll be able to get more value out of your money and give your wallet a bit of relief from the rising prices.

Diversify Your Investments

If you have some money to spare, investing is a great way to get this money to earn for you. After setting aside your savings and emergency funds, consider investing the rest of your money to let it grow. There are various avenues to invest your money in, each coming with its own pros and cons. As such, be sure you do your due research beforehand to see if a certain form of investment is suitable for your needs and risk tolerance. Some of the safest forms of investments include time deposits and money market funds. With time deposits, you lock in your money for a specific period to let it earn higher interest rates compared to savings accounts. Meanwhile, money market funds are a collection of short-term bonds and other low-risk investments. They are usually offered by brokerage firms and mutual fund companies.

Whichever type of investment you decide on, what you should always keep in mind is to diversify. As the saying goes, don’t put all your eggs in one basket. Aside from time deposits and money market funds, you can also check out preferred stocks or corporate bonds. For high-risk, high-reward options, consider initial public offerings or real estate investment trusts. Of course, there’s also the stock market to consider. Ultimately, your money will be safer the more you diversify.

Think Long-Term

In relation to the previous point, strive to think long-term when it comes to your investments. It’s fine to have short-term investments to diversify your portfolio, but long-term options can provide you with better earnings as it has time to build up. One such long-term investment you can try out is Maya Time Deposit Plus. You can set your saving terms for 3, 6, or 12 months and get a guaranteed 3.5% p.a. that you can increase up to 5.75% p.a. if you manage to reach your target amount and date. Through this, your money can grow much more over time than just keeping it on hand as cash or through a normal savings account.

Inflation can indeed be tough on one’s expenses, but that doesn’t mean you can’t do anything to protect your money from its inevitable impact. With the help of the tips discussed in this article, you can better manage your finances to weather the negative effects of inflation.