What I'm Doing to Protect My Family's Budget From High Inflation

Revered investor Warren Buffett has said this about inflation: "The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislature. The inflation tax has a fantastic ability to simply consume capital."

The current rate of inflation in the U.S. is 3.8%, and even if that sounds manageable, it can do a number on your finances. Let's say your monthly expenses are $3,000. After one year, a 3.8% inflation rate means those expenses will cost $3,114. If inflation remains at 3.8% over five years, you'll be looking at monthly expenses of $3,617.

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Slowly, methodically, inflation erodes the buying power of every dollar you earn. Unless your annual income increases by at least 3.8%, your budget is essentially moving backward in the example I just gave. Here are the steps I'm taking to protect my family's finances.

Tracking every dollar

It's been years since I've been this serious about tracking our spending. Rather than keep everything in a logbook like I used to, I've been using a budgeting app to monitor where every dollar goes. Seeing it in black and white on screen has revealed something surprising.

In January 2025, I took a one-month break from ordering anything from Amazon, and the results were both surprising and embarrassing. In that single month, I saved over $1,000. The new budgeting app revealed that I'd slipped back into the habit of making unnecessary online purchases.

My family has now implemented a 48-hour rule. If we really want something, we must give ourselves 48 hours to decide if it's a desire or a need. Desires can wait.

Meal planning and grocery shopping

Food costs have skyrocketed, so I've become much more strategic about grocery shopping. I plan our meals weekly, and my husband actively seeks the lowest prices on the ingredients we need by using the Flipp app, which gathers weekly ads and coupons from local stores. All my husband has to do is type in a specific item, and the app shows him which store it notes as having the best price.

Reducing energy costs

A few days ago, I received a notification from our electricity provider that our per-kilowatt-hour (kWh) rate is increasing from $0.08 to $0.11. Our home is relatively new and well-insulated, so this summer we're opening the windows far more than we normally would and setting the thermostat a few degrees higher.

We already use LED bulbs, but need to do a better job of unplugging devices when they're not in use and running appliances during off-peak hours.

Looking for high-yield savings accounts and actively investing

For years, we kept our emergency fund in a traditional savings account, which was not the best choice. We weren't earning much interest, which meant our money lost value each month. Another job my husband has taken on is finding the best high-yield savings accounts. We don't mind switching accounts every few months if we must. It's all about ensuring that the growth of that money outpaces inflation.

I've also begun moving retirement funds into high-quality dividend stocks and dividend-paying ETFs. It's one of the easiest ways I know to invest in some of the highest-performing companies on the planet while also earning dividends.

The reality is that we can't stop inflation, but we can minimize its impact.

Dana George has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.