How to save your money from inflation?

Inflation shows the cumulative price rise and reduced purchasing power of a country. If you follow the news, you must have heard financial experts use this term extensively regarding savings and investments. That is because inflation has corrosive behaviour on all investments, which concerns investors. Visibly, it may fluctuate but always exists, affecting your net investment yield.

Like other investments, Bank Accounts are adversely affected by inflation. The Savings Account calculator makes it easier to estimate the final earnings on your investment, including the interest earned, amount, and tenure. They are the most liquid assets and are easy to invest in.

Inflationary impact

Inflation leads to a price rise. The amount you deposit in your account grows at the prevailing rate. However, its value degrades due to the rising prices of products. The global recession is at its peak due to the geopolitical situation and the rise in the price of crude oil. Guaranteed returns as interest rates help you hedge against inflation and prevent your money from devaluing.

Ensure you open a Bank Account offering higher interest than the inflation rate. You can sweep your excess funds into an FD, offering better returns.

How to save your money from inflation?

During inflation, you should consider certain factors to avoid impact on your account. By being prepared and alert, you can reduce the inflation effect. The following are the measures you can take:

Use the sweep-in feature

Banks offer a sweep-in feature that automatically books a Fixed Deposit on excess funds in the account. It provides adequate liquidity and better returns in the long run. You can easily activate this on the Banking app and remain carefree about your FD Investments. Since you allocate a chunk of your savings towards the investment monthly, you earn greater returns without a penalty.

Budget to save more

People often overlook budgeting, but saving more during inflation is important. With an efficient budget plan, you can omit unnecessary expenses, track your spending better, and decide your financial objectives for goal-based savings. The Savings Account interest calculator lets you set a budget to save more long-term.

Make long-term investments

Whether it is a deposit or an investment scheme, long-term investments have mostly outperformed inflation to a great extent. With the power of compounding, your investments grow exponentially over the tenure, thus minimising the effects of inflation. It is important to understand that with rising inflation, keep three to six months of expenses as emergency savings in your account.

Conclusion

The Savings Account calculator keeps up with inflation if short-term interest rate changes complement it. It is important to monitor the changing rates provided by the bank and the prevailing inflation rate. Accordingly, look for banks that offer high interest rates on their products that allow your savings to grow faster.

Shashank Bhaskar is an Mba student and financial advisor in Mumbai.he shares his financial experience and guides you about all your financial queries.