With persistent inflation and high interest rates squeezing household budgets, safeguarding your finances has never been more crucial. While UK inflation held at 3.4% in May, experts warn it could surge to 4.4% if geopolitical tensions disrupt oil supplies.
Here’s how to shield your savings and outpace inflation, according to financial experts.
Why Inflation Threatens Your Savings
Inflation erodes purchasing power—what costs £1,000 today could cost £1,100 in a year if inflation hits 10%.
CPI inflation measures price rises over time.
Peaked at 11.1% in 2022 (energy shocks from Ukraine war).
Cash loses value if left stagnant—£1,000 today buys less tomorrow.
Geopolitical Risks Could Worsen Inflation
Strait of Hormuz tensions may spike oil prices to $150/barrel.
Capital Economics warns inflation could jump to 4.4%.
Bank of England’s 2% target looks distant.
5 Ways to Protect Your Money
1. Maximise Savings Rates (Don’t Settle for High Street Banks)
✅ Shop around—online banks & savings platforms offer better rates.
✅ Fix your rate—lock in higher interest before potential BoE cuts.
✅ Emergency fund? Keep it in easy-access accounts (but still compare rates).
“Savers should hunt for the best deal—high street banks often lag behind.”
— Sarah Coles, Hargreaves Lansdown
2. Invest in Inflation-Beating Assets
Stocks & Shares ISAs (long-term growth potential).
Gold & Commodities (historically hedge against inflation).
Property or REITs (real estate often outpaces inflation).
3. Review Debts & Mortgages
High-interest debt? Prioritise paying it down.
Mortgage up for renewal? Lock in a fixed rate to avoid future hikes.
4. Diversify Income Streams
Side hustles (freelancing, rentals).
Dividend stocks (passive income).
5. Cut Unnecessary Costs
Switch utility providers.
Cancel unused subscriptions.
Buy generic brands where possible.
