Savings Account Rates Aren't Keeping Up With Inflation. Here's What to Do About It

Think outside the traditional savings account box.

Inflation has been the dirty word on everyone's lips for months now. Thankfully, July's Consumer Price Index report showed that inflation had slowed a little, but prices are still up across the board on consumer goods. As a result, many people have been dipping into their savings accounts to make ends meet, or going into credit card debt, which is definitely not ideal.

If you're fortunate enough to have a mostly-intact emergency fund stashed away, you may now be wondering: How do I protect this spending power from inflation? While there is no magic bullet, there are four moves in particular you could try making with your cash that may help beat back the inflation monster.

1. Boost your savings (if possible)

"Just save more money" is advice that's very easy to give, but depending on your circumstances, it could be incredibly difficult to follow. If you're already living paycheck to paycheck and have made all the cuts you possibly can just to keep getting by in the face of higher gas costs, higher tabs at the grocery store, and higher utility bills, I sympathize, as I too have been in this position. If you do have a way to save more money, either by cutting back on your non-essential spending or by adding to your income directly by way of a side hustle, now is a fantastic time to do just that.

Thanks to the rise of remote work, it's easier than ever to find remote freelance gigs on major job sites like Indeed. If you want to target remote and flexible positions specifically, check out FlexJobs.com, which does have a subscription fee, but all jobs listed are real and vetted by humans, to ensure that you're not being scammed while applying for jobs.

2. Get a high-yield savings account

If you're still keeping your emergency fund in a traditional savings account, you're missing out on the higher (and ever-increasing, as of late) interest rates being paid out on high-yield savings accounts. Online-only banks, in particular, can offer better rates on savings accounts because they don't have the same level of overhead costs (such as buildings to maintain) as a traditional bank or credit union. They can pass the savings onto their customers in the form of higher interest.

I started a high-yield savings account with an online-only bank just a few months ago, and I was incredibly pleased by how easy it was to set up. By linking it to the big bank checking account I use to pay my bills (and accept direct deposit paychecks), I can easily fund it.

3. Try a money market account

For a higher interest rate on your savings, you can consider a money market account. These, too, will command higher interest than a traditional savings account, but they also make it easier to get at your money by offering a debit card or check-writing capabilities without needing to link a checking account to your savings.

A money market account is kind of like a hybrid of a checking and a savings account, but it definitely can't replace a checking account, unless you rarely withdraw money. Savings and money market accounts are both subject to Regulation D, which limits how many withdrawals and transfers an account holder can make each month.

4. Start investing

While none of the above methods will really "beat" inflation, if you can spare some cash to invest for the long term, that will get you on the right financial track…for the future. Invest with the money you don't need in the near future; think retirement. It doesn't take much money to start investing. For the cost of the much-derided daily fancy coffee, you can start building wealth that will help you beat inflation; index funds have historically returned around 10% per year on average.

Times of high inflation also offer the ideal opportunity to buy I bonds. These are government-backed securities, and their interest rate is actually tied to inflation. They're easy to buy, and you can invest as little as $25. Note, however, that your money will be unavailable to you for a minimum of 12 months -- so definitely don't use your emergency fund savings to buy I bonds.

If you're still making do with a traditional savings account at your local brick-and-mortar bank, and worrying about inflation taking bites out of your cash, look into one of the above options to grow your savings. Your future self will thank you.