How to Spend and Save Smarter in Any Economic Climate

by Geoff Williams |July 19, 2023

Shopping wisely and making smart spending decisions isn't exactly easy in the best of times, and during times of inflation, it's particularly challenging. But regardless of the economic climate you're in, finding ways to save for your retirement is always worthwhile — it may just take some behavior-shifting.

Right now, signs are pointing to economic recovery. Inflation, the term that describes the increase of goods and prices rising all at once, is currently hovering around 4%, according to the U.S. Bureau of Labor Statistics — it's eased considerably since the summer of 2022 when it peaked at 9.1%, though rents and mortgages are still relatively high.

If you're struggling with recent price hikes, you may be tempted to cut back contributions to your 401(k) or to stop putting money into your retirement altogether, but that may not be the best idea. After all, saving less may just make money tighter when you really need that retirement fund. Whether you're feeling overwhelmed by rising costs or have already adjusted, here are some money moves you can make today to keep working toward your retirement goals tomorrow.

Improve your cash communication

If you're managing money carefully, that's great, but you're at a disadvantage if your spouse or partner isn't doing the same. (You may start to feel as though you're bailing water out of the boat, and your companion is scooping it back in.) If you have teenage kids or other household members spending money, be sure to loop them in, too. It's a good way to help teach them smart habits for them down the line. You can do this in a variety of ways:

  • Make a point of having regular (daily, weekly or monthly) semi-formal conversations about your biggest expenses and the things your family needs to save up for, such as college tuition, vacations or home improvements.
  • Create a shared family budget document that you all can access.
  • Come up with budget "challenges," for the family, such as a no-spend week, and maybe even offer small cash prizes or gift cards for the family member who saves the most or spends the least.

This type of group clarity is motivating. "In my experience, the most common mistake people make when saving money is not setting clear goals," says Mario J. Payne, a certified financial planner and financial advisor and founder of TOAMS Financial in Jacksonville, Fl. "Whether it's for retirement, a down payment on a house or an emergency fund, having a specific goal gives your saving efforts direction and purpose," he adds. "It makes the process more rewarding and helps you stay disciplined, even when faced with tempting spending opportunities."

A woman adds change to a glass jar

Buckle down and budget

We often groan at the word budget as though it's a sign we're not doing well financially. But creating one is actually proof that you're aggressively trying to grow your wealth. You can budget in a number of different ways, but here are a few popular strategies:

  • The 50/30/20 budget. With this approach, also known as a "pay yourself budget," you put 50% of your income toward needs, 30% toward wants and 20% toward savings and debt. "It's a classic strategy that still surprises me with how underutilized it is," says Payne. "The idea is to treat your savings like any other bill. It should be a non-negotiable part of your budget."
  • Cash jar or envelope system. This method can be tricky to pull off in a digital age, but the idea is that you put your money for each expense into one envelope or jar so you don't inadvertently spend cash allotted for, say, your utility bill or the beach getaway you're planning.
  • Zero-sum budget. With this strategy, whatever is left over after you pay your monthly expenses either gets invested, goes toward paying off debt or is moved into an emergency fund.

Whichever style of budget you choose, it's bound to be helpful. Whenever you systematically keep track of how much you're spending, you're more likely to notice patterns that can help you figure out where to cut back, such as repeat services or monthly subscriptions you rarely use. Budgets also are more likely to work when they fit your personality. If you are somebody who worries about falling short on expenses, a cash jar or envelope system may be perfect for you. If you're more of a big-picture person, the 50/30/20 budget may be your thing.

A woman compares the price of clothing items in a store

Get smarter about spending

In the time-crunched world we're living in, it's not always easy to be mindful about where our money is going, and retailers often take advantage of that, says Trae Bodge, a New York City-based shopping consultant who runs the blog

Impulse shopping is one of the biggest issues when it comes to wasting money, Bodge says, adding, "Retailers are very good at enticing us to shop and creating a sense of urgency, so I always encourage shoppers to take a beat before clicking 'buy' or checking out."

Comparing prices and searching for coupons are always smart steps before purchasing, and beyond that, these small moves can have a big, bottom-line impact:

  • Join a warehouse club. These programs often entail upfront membership fees, but if you do a lot of shopping, buying in bulk can save you money in the long run. Plus, warehouse clubs frequently offer deals on travel, tires, gasoline, hearing aids, eyeglasses and appliances too.
  • Join a "Buy Nothing" club. There are outposts of these all around the world, and the concept is that you can ask for anything and give away anything you want, so it can be a great source of gently used furniture and household goods especially. And it's not only altruistic but also sustainable — it's more environmentally friendly to give things away than throw them away.
  • Seek out cheaper alternatives. If you haven't changed the plan or provider for your electric utility, cell phone service or insurance in a long time, it can be worth researching whether there are less expensive options you can switch to. A number of websites can do the rate comparisons for you, but you might also want to call your cable provider, for example, to ask if they can come down on the price.
  • Optimize your credit card benefits. That is, don't forget to use the rewards you earn. It's widely known that many credit cards offer points when you shop in certain categories, and in addition, says Bodge, "credit card carriers often have exclusive arrangements with select retailers," which means you can save more by shopping there with that card. If you're going to really get the most out of your card or cards, it's important to pay attention to notifications from your card provider and regularly check the site. Rewards change periodically, he says, "and card issuers will sometimes raise their rewards for a limited time period."

Level-up your income

The best way to enhance your earnings is to ask for a raise, of course. But if that isn't feasible in your current financial state, you can still consider other lucrative options like taking on a part-time side gig, holding a yard sale, selling clothing or furniture through online consignment shops, or doing something a little more out-of-the-box. You could rent out storage space in your home, for example, or if you have a talent other people wish they had, such as being a piano player or an excellent gardener, turn that into a part-time business by teaching students one-on-one or by through workshops at a community center.

These options may not be practical for everyone, but in general, looking beyond your current income stream for additional sources can be a fruitful exercise to keep funding your savings and retirement accounts. "Saving money is less about the amount and more about developing the right habits and strategies," Payne says, and while adopting these early gives you a bigger savings runway, "it's never too late to start."

You're also hedging your bets in a sense. If inflation rises again, you'll be relieved you've already improved your spending and saving habits. And if it continues to ease up, there really isn't a downside; you'll just have more money in your checking account.

Geoff Williams

is a Loveland, Ohio-based author and journalist. He has written for The Wall Street Journal,, and U.S. News & World Report.

The views expressed herein are those of the author and do not necessarily reflect the views of Citi. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.