How Americans can cut costs and save amid the pain of record inflation

Government data shows that inflation has broken another 40-year plus record.

And even Treasury Secretary Janet Yellen predicted higher prices could be with us for the rest of this year.

“We’re likely to see another year in which 12-month inflation numbers remain uncomfortably high,” Yellen told CNBC’s “Closing Bell” on Thursday.

That’s as Consumer Price Index data show that inflation shot up by 7.9% in February over the last year, in the fastest gain since 1982.

Hopes that inflation would be temporary now have been dashed.

Surveys report Americans are definitely feeling the pinch. One poll from LendingClub found that 64% of Americans are living paycheck to paycheck at the start of 2022, up from 61% in December.

Yet experts say you can still take steps to make your money go farther.

The Federal Reserve is expected to begin raising interest rates next week. When they do, that will kick up the interest you can earn on your cash.

Some accounts may be poised to see those increases first.

“The online savings accounts that are currently paying competitive yields are likely to be the ones that remain competitive as interest rates go up,” said Greg McBride, chief financial analyst at Bankrate.com.

“You want to be where banks are already paying a premium to get your money,” he said.

Admittedly, with an interest rate around 0.5%, these accounts are not beating inflation.

Online savings accounts are typically the best place for sums of money you expect to need in one or two years, said Ken Tumin, founder and editor of Depositaccounts.com. If your time frame is longer, you may be able to find a better return on your money elsewhere.

Even amid the recent market rout, the primary way to offset inflation is to own equities, according to Mark Hebner, president and founder of Index Fund Advisors, an Irvine, California, fee-only advisory and wealth management firm that was No. 72 on CNBC.com’s FA 100 list for 2021.

The reason for that is that stocks have a strong track record. Over more than 90 years, equities have had returns in excess of inflation, he said.

The key to success is to design an all-weather portfolio for all market conditions and then to rebalance when necessary, Hebner said. In other words, scary headlines should not throw you off course and prompt you to make reactionary trades.

Rising prices may kill any joy you may feel from “retail therapy,” according to research from Duke University’s Fuqua School of Business.

Instead, the purchase may leave you with a case of buyer’s remorse.

As we feel financially constrained, we’re more likely to second guess our decisions and wonder if we could have made a better choice.

“That opportunity cost, the thing I could have done with the money, weighs on me,” said Gavan Fitzsimons, a professor of marketing and psychology at Duke’s Fuqua School of Business, during a recent webinar. “Because that weighs on me, I end up with this reduced happiness.”

So how can consumers feel better about their purchases?

“One thing we know for sure is we can plan,” Fitzsimons said.

By thinking through your consumption, you can make sure the purchase is a good one, and a justified use of the money, he said.

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Another way to combat rising prices is to fix your costs, said Carl Zuckerberg, founding principal and chief investment strategist at RZH Advisors, an independent wealth management firm in Stamford, Connecticut, that was No. 46 on on CNBC.com’s FA 100 list for 2021.

Try to refinance or pay off any existing debts. To that end, Zuckerberg has urged clients to refinance their mortgages at 15- and 30-year fixed rates.

When buying new items, pay attention to deals that offer 0% interest for extended periods.

“If you think inflation is going to be high, that means every day one dollar is worth less,” Zuckerberg said.

If you can pay with future discounted dollars, that’s a home run in an inflationary environment,” he said.