With inflation soaring to levels unseen since the 1970s, families are grappling with higher prices for everything from food and gasoline to vacations and gifts. Basic strategies to survive inflation involve spending (or saving) less or earning more. If you’re retired, surviving inflation means using more of your savings — assuming that’s something that won’t leave you destitute when you’re older — or finding an acceptable side hustle.

Realize, too, that inflation has a lasting impact. The last high-inflation period in the U.S. lasted 4 years. And prices rarely go down. So, inflation builds on itself, leaving prices higher for a lifetime. Thus, when you consider inflation-fighting strategies, make sure you’ve picked an answer that you can live with long-term.

How retirees can survive inflation

Inflation is often hardest on retirees, who are living on savings, investments, and fixed sources of income, such as pensions and Social Security. So, we’ll start with how retirees can figure out their best option. (Not you? Skip ahead to “How workers can survive inflation.”)

To figure out whether you’ll have enough to survive inflation without exhausting your savings, do a quick calculation.

Quick math

Look at how much money you get each month from fixed sources of income, such as pensions and Social Security. Compare that to how much you spend. If your monthly spending exceeds these sources of income, this spending gap is financed by pulling money from savings.

For instance, if you receive $2,000 a month from Social Security and pensions, but you spend $3,000 a month, you’ve got a $1,000 gap that’s funded through savings.

Will your savings last as long as you do?

To answer the pivotal question of whether your savings will last as long as you do, add up the balances in your savings and investment accounts. Take that total and simply divide by your savings gap. Let’s say you have $100,000 in retirement savings. You divide $100,000 by your monthly savings gap of $1,000 to find that your savings will last roughly 100 months — that’s 8.3 years — before the account is depleted. (Obviously, this is a simplistic calculation that could swing a bit in either direction, depending on investment returns, cost-of-living adjustments, and your future spending. But the older you are, the more likely it is to be close.)

If you’re likely to live longer than your savings and you don’t have good ways to cut costs, you should consider a side hustle to fill some or all of your spending gap. (Skip ahead to “side hustles” to find a money-making option that suits you.)

How workers can survive inflation

If you are still working, you have considerably more options. You can cut back; you can (at least temporarily) stop saving for long-term goals; or you can find ways to earn more money.

But what if you’ve already cut spending, aren’t saving and you are financing today’s bills by dipping into savings or putting regular monthly expenses on a credit card? This is a recipe for financial disaster. Like the retiree likely to exhaust his or her savings, you need to earn more. Jump ahead to “side hustles.”

Cutting back

For everyone else, cutting back is a reasonable choice. To do this thoughtfully, separate your monthly expenses into necessities and discretionary.

What are necessities? Anything that keeps a roof over your head, the power and water on, and food on the table. Monthly payments on debts are also a necessary expense. So too are the transportation and miscellaneous expenses that allow you to get to work and do your job well. The last thing you want to do in inflationary times is jeopardize the work that keeps income flowing into your household.

Prioritize discretionary spending

Now consider those discretionary expenses and separate them into high-priority and low-priority. New clothes for growing kids would be a high priority, for example, as would their school supplies. Things that you love, whether that’s eating out or cable, might also fall into the high-priority category. And saving for both long and short-term goals is likely to be a priority for anyone who thinks ahead.

But you may decide that you can’t currently afford school fundraisers or the cost of after-school sports. Perhaps, your clothing, lunch or coffee/snack spending is out of whack. And maybe, you need to cut the vacation and gift budget.

If you can cut back this way without significantly eroding your happiness, you’ll survive this inflationary period unscathed. Indeed, you might get into better spending habits that will put you in a better long-term position overall.

What about savings?

Saving for long-term goals should be part of your discretionary budget. And the more precious the goal, the higher the priority to save for it. However, if you are likely to get significant raises that will close today’s budget gaps, you can temporarily suspend saving to cope with inflation. Just be sure to check back and resume savings as soon as those anticipated raises lift you into a position to better pay your bills. 

More priorities than paycheck

However, if your necessary and high-priority spending exceeds the amount you have coming in each month, you need to look at how to earn more money. That may require asking for a raise or seeking higher-paying work.

If neither of those options is viable, consider doing a side hustle in your spare time.

Side hustles

There are literally thousands of different ways that you can make money in your free time. These include the well-known driving and delivery applications, such as Uber and DoorDash. But it also includes hundreds of professional and service-oriented portals that can help you earn money doing almost any job that you’re qualified for.

Dozens of sites also help find customers willing to rent your house, yard, swimming pool, RV, Motorcyle, camping equipment and storage space. These can be particularly nice side hustle options for retirees, who don’t want to go back to work but have accumulated assets that are underused.

Meanwhile, parents of young kids can earn money for things they’re doing anyway — like helping with homework — and walking dogs. 

Want to find a good side hustle that matches your unique combination of interests, skills and resources? Check out the SideHusl Quiz, where you can answer a few questions to find the highest-rated side hustles that suit your needs.