Beating Inflation: 8 Ways to Keep Your Money’s Purchasing Power

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As a topic, inflation has been quite trendy these days. And for the right reasons too!

You see, we all talk about inflation and get tensed about it as there’s money involved. Our money keeps losing value with it. That’s why inflation is often thought of as an invisible tax that erodes the purchasing power of our money.

Considering the skyrocketing cost of living on top of that, it’s now more crucial than ever to keep more value for our money.

Hence this proposal of beating inflation. Because achieving this proposition is how we can truly liberate ourselves economically!

But first…

What is inflation?

Inflation is the rising price of goods and services in an economy. When inflation goes up, the purchasing power of your existing money decreases. What that means is that your money buys less. As a result, you get fewer goods in exchange for that money than before!

You can see why it’s essential to learn how to defeat inflation. The escalating inflation causes your wealth to lose value. To keep afloat, you must know your way around it.

What does purchasing power mean?

Since I name-dropped the term multiple times, I might as well explain it briefly. The purchasing power of money refers to the quantity of commodity or service that can be exchanged/bought for one unit. So, the purchasing power of dollars would mean describing what a person can get in exchange for 1 dollar.

Naturally, when the dollar bill gets devalued due to inflation, one gets fewer goods/services. What that means is your money is intact in your pocket, but its value is not. The purchasing power of the said currency/money decreased — no thanks to inflation!

What is the relationship between purchasing power and inflation?

Inflation can have a major impact on your finances without you even realizing it. Inflation is inevitable. So, over time, the purchasing power of your money can (and will) decrease gradually due to inflation. This is how inflation erodes money’s purchasing power!

This can make it difficult to keep up with the rising cost of living and maintain your standard of living.

A simplistic illustration of a seesaw visualizing the correlation between the purchasing power and inflation
It’s simple as a seesaw — when inflation escalates, the purchasing power of money decreases!

When your income has little to no growth while the inflation accelerates like there’s no tomorrow, that’s a serious red flag! You’ll have a hard time making ends meet with the raised price tags on everything you need.

Besides, essential needs always get prioritized over comfort (for obvious reasons). So, with less purchasing power, your entertainment and enjoyment in life will need to be cut down. For some people, that budget cut can also harm basic needs too!

But not if you know how to beat and bypass all these!

Simple steps to defeat inflation

Now, however normal or unusual the rate of inflation is, it’s always bound to happen. That’s how money and the whole economy work. But if you can plan ahead, you can still keep afloat!

By being strategic about managing your money, you can make sure that your purchasing power doesn’t take a hit from inflation.

There are 4 simple steps, in my opinion, that can help you keep your money’s purchasing power intact in dire times. So, here goes…

4 steps of beating inflation, visualized using a flow chart

How to beat inflation in 4 simple steps

1. Beating inflation by saving

Saving money is a great way to keep the purchasing power of your money, only if you save it the right way. Still, people often wonder how to beat inflation with savings!

It’s quite simple — you should put it somewhere (Bank/NBFI) that’ll give you a fixed or variable interest. Over time, that interest will help offset the after-effects of inflation.

2. Beating inflation by investing

Another great way to beat inflation is to invest your money. When you invest, you’re putting your money into something that has the potential to grow in value over time. So, when that potential company/venture/project grows, your money flourishes too. This can help you keep ahead of inflation.

3. Beating inflation with a frugal lifestyle

One of the best ways to keep more of your money’s purchasing power is to live below your means. If you can live on less than you make, you’ll be able to save and invest more money. This will help you keep ahead of inflation in the long run.

4. Beating inflation by being aware

Finally, it’s important to be aware & prepared for inflation. This means keeping everything in check for rainy days. You can’t wait for the rate of inflation to soar high, rather measures should be taken beforehand.

What measures are we talking about? Glad you asked!

Most effective tips for beating inflation

Invest in tangible assets

Inflation can erode the purchasing power of money over time. But there are ways to protect yourself by investing in assets that hardly lose value when inflation goes up.

A tangible asset is guaranteed to hold its value over time if you can keep its physical condition intact. Often termed deflationary assets, these long-term investments ensure that your possession doesn’t get devalued as much as other holdings.

The prime examples of such investment-worthy assets are gold and silver. These precious metals tend to hold their value better than other assets when inflation goes higher. Sometimes they even go up in value during inflationary periods, which is always rewarding for investors.

Another sweet spot of deflationary investment is real estate. Lands and properties almost always grow in value no matter what the economic situation is. And the best part is that there’s the opportunity of renting out. If you can purchase property in an in-demand area, inflation won’t be an issue with the handsome rent you’ll get.

There are other forms of tangible assets worthy of investment depending on your location and interests. You just have to find those inflation beating investments that are suitable for you.

Grow money by investing

If you’re still thinking about how to invest to beat inflation, let’s uncover some more! Many other non-conventional ways of investing are at your disposal that can save you from inflation.

different ways of beating inflations via investment
The very basics of how to beat inflation with investments — bonds, stocks, and money itself!

One such instance is investing in stocks and bonds. Liquid assets like these have less chance of losing value with time — only if you can choose them wisely and carefully. And, if you invest in stocks and bonds that pay dividends, the returns will be much greater even when the inflation rate is on the way up!

There’s also the option of keeping your money in a savings account or the money market. The former will guarantee you stable interests, while the latter has the potential of bigger returns given that you learn how to trade there.

Live below your means

This one is a no-brainer. The idea is simple — if your money is worth less now, try spending less to catch up with the situation. Or even better, make a lifestyle around the concept and live happily ever after!

Let’s clear something right off the bat. Living below your means doesn’t necessarily mean you have to live a life of deprivation. It simply means being mindful of your spending and making sure your expenses are in line with your income.

Also, your expenditure should never exceed your income — keeping you safe from the cycle of credits and loans. This may seem common sense, but it’s easy to get caught up in the rat race of life and start spending more than you make. If you find yourself in this situation, it’s essential to make adjustments to your budget so that you’re living within your means.

When you ensure these practices in your life, saving money and building wealth will be easier than ever!

Diversify your investment

If you’re wondering how to defeat inflation by investing, remember this: “Don’t put all your eggs in one basket”. It’s the gospel of investment regardless of the market involved. And guess what, you can protect yourself from the effects of inflation by investing in a mix!

Diversifying the portfolio is like investment 101. The more variation your investment portfolio has, the less risk you endure.

Every possession comes with its risk factor of increasing or decreasing in value over time. So, placing your bet on one or two options increases the stakes way higher than branching out the investment in like 10/20/50 different assets.

This way, the hits taken by assets due to inflation have higher chances of being minimized and balanced by other assets that evade the risk.

That’s why diversification is always considered to be a safe call.

Find ways to increase your income

How to beat inflation by utilizing alternative/secondary/passive income streams
Multiple income streams, especially passive ones, help to beat inflation.

Whether you have a day job, run your own business, or work as a freelance contractor, that’s your regular cash flow. The primary goal, here, is to ensure your hand-to-mouth livelihood.

But what about savings, or investments for the future? In times of inflation, how will you survive on a fixed/predetermined set of incomes?

The solution? You have to increase your income in one way or another.


While it totally depends on your skill set, interests, availability, and countless other factors, here are a few ways to try out for a second income:

Side hustle

The term basically means doing something other than your regular work to earn extra money. It can be anything ranging from running an f-commerce or an e-commerce store to providing services in online marketplaces at night.

When you have money coming from more than one source, two things happen:

  1. You earn more money than before (duh!)
  2. If one income stream is affected by inflation or any other factor, the other stream(s) make up for the loss

But always remember not to fall into the loop of toxic hustle culture. The fact that you’re putting in additional hours is enough, you don’t need to glorify it for the rest of the world.

Passive income

When you put a little effort into creating a timeless asset to generate revenue from it for years to come is called a passive income. The name comes from the lack of activeness in efforts to produce money over the passage of time.

For example, you can create an online course or an ebook to sell it afterward and earn passive income through it. You won’t have to put any more effort into it after making the material just once.

Monetize your influence

You have expertise in certain topics, right? And you also influence people to buy stuff or make decisions on those topics?
To quote the Joker from the infamous Dark Knight film, you shouldn’t be doing these influences for free if you’re so good at them!

Brands are spending millions on industry-specific influencers, and people are also hooked to these influencers (and for the right reasons too). So, utilize these opportunities and be an influencer already!

Grow a personal brand around your expertise and make a secondary income stream out of it. Yes, it takes time but pays off really well.

Reduce cash holdings during inflation

Less cash, more assets — this should be your motto if you want to neutralize the effects of inflation.

With time, money (as in cash holdings) gets devalued. And it’s normal too. Every currency in the world has a normal rate of inflation of its own. The problem is, sometimes it goes off the charts. Our cash doesn’t give us as much value/goods as before and as a result, we start going crazy!

So, start planning today and minimize your cash holding. That doesn’t necessarily mean you should make your balance zero on the bank. You must keep enough cash for necessities and emergencies.

The gist, here, is to turn a chunk of your cash holdings into valuable assets (mentioned in the previous sections). That way, the devaluation due to inflation won’t harm you that much.

Invest in yourself

investing in one's self-development helps in beating inflation
Learn, adapt, and grow to make the best investment of your precious time.

The biggest investment you can make right now is in yourself. That means you should allocate more time, money, and energy to personal growth. Gathering knowledge, learning skills, enhancing soft skills, etc. are a few good examples of this type of investment.

But how would these help with beating inflation?

People who fall behind in terms of new technology, skills, and knowledge always find themselves lost in times of inflation. Their income decreases day by day — or worse, it comes to a halt! That’s why spending time upgrading yourself comes to fruition when applying them and earning more money than before.

By increasing your skills and knowledge, you’ll be able to earn more money and keep ahead of inflation.

Try to keep yourself up to date

I get it. Being aware of the economic updates with everything going on in your life is not easy. But awareness is always better than acting late and losing money, right?

So, try staying informed about inflation rates. This will help you anticipate changes and make adjustments to your budget accordingly. It’ll also give you a warning as to when you should buy more assets or rethink your investments.

This way, you’ll have enough time to plan ahead and bring greater results from your portfolio.

Closing notes

As we’ve seen, there are several ways of beating inflation and keeping more of your money’s purchasing power. I hope, by following the tips in this article, you’ll take better care of your money in times of inflation.

Share your thoughts and questions down below. Thanks for reading!

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M. Asif Jamil
M. Asif Jamil

M. Asif Jamil is a cosmic wanderer who's fueled by coffee and chocolate. He likes to write about marketing, branding, psychology, copywriting, contemporary society, WordPress, personal finance, cinema, and everything in between.


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