1 in 4 Americans Are Raiding Their Savings Just to Cope With Inflation

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If that’s something you’ve done, it may be time to try to boost your income. 

Inflation has been battering consumers for well over a year now. And unfortunately, the problem seems far from over.

January’s Consumer Price Index report was recently published, and it showed a 0.5% increase in inflation from December. That’s a pretty big month-to-month jump — and a sign that inflation is not about to slow down.

It’s not surprising, then, to learn that many Americans have been raiding their savings accounts to cope with inflation. According to the most recent Country Financial Security Index Report, 27% have taken a withdrawal to account for higher living costs.

On the one hand, the fact that consumers have savings to fall back on is a good thing. Without savings, those same people would potentially be sitting on piles of credit card debt.

On the other hand, it’s generally not a good thing to be continuously dipping into savings to cover monthly bills. That money should really be reserved for emergencies or big goals. And chances are, you don’t want to completely whittle your savings down in the course of covering your cable bill or paying for groceries.

If you’ve been consistently raiding your savings as inflation surges, it may be time to pick up a second job. That income boost could be your ticket to not only managing your bills, but replenishing the recent withdrawals you’ve taken.

It pays to give your income a boost

While rampant inflation is not a good thing for many consumers, one positive thing about today’s economy is that the labor market is quite solid. And that extends to the gig economy. So if you’ve been struggling to pay your bills on your regular paycheck alone, now’s a pretty good time to pick up a side hustle, whether it’s working evening shifts at a nearby restaurant or driving for a ride-hailing service on weekends.

Carving out time for a side hustle may be an adjustment. But on the flipside, it might alleviate a world of financial stress and help you preserve your savings.

Let’s say you’ve been taking $250 monthly withdrawals from savings for the past six months to cope with inflation. That would mean you’re down a whopping $1,500 in total.

That’s a pattern you probably want to break. And since it could be a while until inflation cools off, boosting your income might be your next best bet.

If you can manage to earn $250 a month from a side gig, you’ll be able to leave your savings alone for a while. And if you earn more than that, you can start to put back some of the money you’ve recently taken out.

Take a close look at your spending, too

A second job could be your ticket to managing your bills while living costs are higher for everyone. But it might also help to examine your spending and figure out if there are bills you can cancel or trim.

You might enjoy having access to cable. But if you’re dipping into your savings every month to the tune of $250 and you’re currently spending $100 a month on cable, that’s an expense that may be worth cutting — especially if you can replace it with a $20 streaming service instead.

Unfortunately, rampant inflation could end up being with us for most, or all, of 2023. So it’s best to do what you can to minimize the financial blow it deals you.

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