How to Protect Your Purchasing Power?

Inflation eats away at your purchasing power, but there are various ways to protect yourself. From salary negotiations to smart investments - here you'll find practical tips to strengthen your financial position.

1. Negotiate Salary Indexation

The most important way to maintain your purchasing power is to ensure that your salary keeps pace with inflation.

As an employee

• Check if your collective agreement includes automatic salary indexation
• Ask your employer about their indexation policy
• Negotiate annually for a salary increase that at least compensates for inflation
• Prepare your negotiation with concrete inflation figures

As a freelancer

• Increase your rates annually in line with inflation
• Include an inflation adjustment clause in your contracts
• Communicate price adjustments to clients in a timely manner

2. Build a Financial Buffer

A financial buffer protects you against unexpected costs and prevents you from having to borrow at high interest rates.

• Aim for 3-6 months of fixed expenses as a buffer
• Keep your buffer in a savings account with the highest interest rate
• Regularly compare savings rates between banks
• Note that even the highest savings rate is often lower than inflation

3. Invest Wisely

Money in a savings account loses value due to inflation. Investing can help maintain your purchasing power in the long term.

Stocks and funds

• Historically, stocks have outperformed inflation over the long term
• Spread your risk by investing in index funds or ETFs
• Think long term (at least 5-10 years)
• Only invest money you can afford to lose

Real estate

• Real estate often maintains value during inflation
• Rental income can be indexed
• Watch out for high purchase costs and maintenance

Inflation-linked bonds

• Government bonds whose interest moves with inflation
• Lower returns but protection against inflation
• Suitable for risk-averse investors

4. Reduce Unnecessary Expenses

In times of high inflation, it's extra important to be conscious about your spending.

• Analyze your fixed costs and look for savings opportunities
• Compare energy, internet and insurance providers annually
• Avoid impulse purchases - make shopping lists
• Buy bulk products and store brands where possible
• Use cashback apps and discount promotions wisely

5. Pay Off Debt

High debts with variable interest rates can be dangerous during inflation.

• First pay off debts with the highest interest rate (credit cards, revolving credit)
• Consider refinancing if your mortgage rate is high
• Avoid new debts during periods of high inflation
• Note: inflation can make fixed debts relatively smaller

6. Develop New Skills

Investing in yourself is one of the best ways to protect your purchasing power in the long term.

• Take courses and training in your field
• Learn new skills that make you valuable in the job market
• Network and build your professional reputation
• Consider a side job or side hustle

7. Take Advantage of Tax Benefits

The government offers various schemes that can strengthen your purchasing power.

• Maximize your mortgage interest deduction (where applicable)
• Take advantage of work-related benefits (pension, company car)
• Apply for allowances and credits you're entitled to
• Use tax benefits for sustainability investments

8. Plan for the Long Term

Think beyond today and take structural measures.

• Build your pension - state pension is often insufficient
• Consider periodic investments (dollar-cost averaging)
• Create a financial plan for the next 5-10 years
• Review your plan annually and adjust where needed

Calculate Your Purchasing Power

Want to know how inflation affects your purchasing power? Use our purchasing power calculator to calculate exactly what price increases mean for you. Also regularly check the current inflation figures to stay informed.