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As inflation creeps upward, many American households are losing their purchasing power — meaning their dollars don’t stretch as far as they used to.

In May, inflation rose to 4.2% over the previous year, up from 3.8% in April, according to the latest Bureau of Labor Statistics release. That’s the highest rate (1) in three years. The Fed’s goal is to keep inflation around 2% annually (2).

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That jump is due, in large part, to higher energy prices driven by the Iran war. Compared to 12 months ago, the cost of energy has risen by 23.5%, with gasoline surging 40.5% (3).

The consumer price index rose by 0.5% between April and May, with higher energy costs accounting for more than 60% of that monthly increase.

The initial oil shock of March is also trickling through the economy, impacting other areas that rely on oil and gas, such as airline fares.

And the financial pain points are spreading for Americans. As wage growth stagnates (4), household budgets are feeling the squeeze, especially with essentials like groceries and gas.

Consumer sentiment reflects this, with household expectations around their own finances and future credit access deteriorating, according to the Federal Reserve Bank of New York’s May 2026 Survey of Consumer Expectations (5).

At the same time, if you have cash sitting in an account that earns less than the rate of inflation, it’s losing its purchasing power. In other words, the same amount of money buys fewer goods and services than it did previously.

So, for example, while a $100 bill is still equal to $100, you might notice that you can’t buy as many groceries with it as you did previously. Trimming unnecessary expenses can help, but this is difficult for households that are already stretched thin.

Ideally, you’ll want to stash your cash and emergency savings somewhere that minimizes the impact of inflation. Here are a few options.

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If you have an emergency fund, you want your money to be easily accessible if and when you need it — not locked away in long-term investments. This is also the first step towards financial independence and security for many. One option is a high-yield savings account, since you earn a higher rate of interest than a checking or traditional savings account, yet your cash is still liquid.

Traditional savings accounts offer an annual percentage yield (APY) of just 0.61%, while a HYSA can offer up to a 4% APY, according to Bankrate’s survey of institutions (6).

A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.

A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.

That’s ten times the national deposit savings rate, according to the FDIC’s May report.

Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.

With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8 million FDIC Insurance eligibility through program banks.

A money market account also offers a higher interest rate, similar to an HYSA, but with the flexibility of a checking account — such as the ability to write checks (7) or withdraw funds with a debit card.

An MMA could be ideal for emergency or short-term savings, but keep in mind that it might come with a higher minimum balance requirement than a savings account. And, if your balance dips below that, you could be charged a monthly fee or possibly be dropped to a lower interest rate tier.

A certificate of deposit also offers a higher interest rate, but over a set term — from a few months to more than five years. Once your CD (8) reaches maturity, you’ll get your principal back (the original amount you deposited) plus interest.

But, with a set term, your money is less liquid than in a HYSA. If you withdraw your funds early, you’ll typically pay a penalty and potentially lose out on the gains you’ve made.

The key is choosing a term that fits your plans. You don’t want to lock away money you may suddenly need, but for cash you can leave untouched, a competitive CD rate can provide predictable growth. Depending on where you are in life, it might make sense to start with a CD, then move that money, plus interest, into a HYSA afterwards.

If you want to compare competitive rates without spending hours searching, platforms like CD Valet can help you find high-yield CDs that match your timeline and savings goals.

CD Valet tracks more than 40,000 verified rates from FDIC-insured banks and NCUA-insured credit unions, giving users a fuller snapshot of the market instead of just a handful of promoted offers.

Unlike other websites, they show every publicly available rate, ensuring you have a comprehensive view of the market. Plus, their CD rates are updated continuously, so you can shop, compare, and open CDs with ease.

There are different types of U.S. Treasury securities: T-Bonds, T-Bills and T-Notes. T-Bonds are fixed-income securities that mature in 20 or 30 years. While they generally have lower returns than stocks, they’re popular for their stability, liquidity and fixed returns. Treasury Inflation-Protected Securities (TIPS) are a type of bond that’s adjusted to keep up with inflation (10).

T-Notes, on the other hand, typically mature in two, three, five, seven or 10 years. With longer-term options, including T-Notes, T-Bonds and TIPS, investors receive a ‘coupon,’ or a fixed rate of interest, every six months until maturity.

T-Bills, on the other hand, mature in a year or less (11). Currently, a three-month T-Bill has an annualized 3.7% yield, while a one-year T-Bill comes in around 3.9% (12).

Another way to get exposure to Treasurys without buying individual bonds is through Treasury exchange-traded funds (13) (ETFs). This investment fund holds a basket of Treasurys and trades on stock exchanges. But there’s a cost for both actively and passively managed ETFs, so do your research to find the right fit.

While traditional bonds typically don’t perform well (14) during times of inflation (bond prices tend to fall when interest rates go up), municipal bonds (15) – which are debt securities that are issued by states, cities and other public entities – could be an option for people in a high tax bracket or a high-tax state.

With municipal bonds, or munis, you don’t pay federal tax on interest, nor do you pay state taxes if you live in the state that issued the bond. However, munis can be riskier than Treasurys, since they rely on local revenue and could potentially default.

Other ways to fight back against inflation are to trim discretionary expenses and consider signing long-term contracts to lock in costs (where it makes sense). It’s also a good time to prioritize paying down high-interest debt. Paying 21% interest on accumulating credit card debt will negate that 4% you’re earning in a high-yield savings account.

For investors willing to ride out market swings, the stock market has historically generated returns higher than inflation. Since 1957, the S&P 500 has delivered 10.5% average annual returns (16). So far this year, the index has climbed more than 9% — outpacing the current inflation rate (17).

One of the simplest ways to get exposure to that growth is through index ETFs, which track the performance of major indexes rather than relying on picking individual winners. They offer broad diversification across some of the largest companies in the U.S., often with lower fees than actively managed funds.

And you don’t need thousands of dollars to get started. Investing just $20 a week for 30 years could grow into more than $179,000 if returns average 10% annually, thanks to the power of compounding.

Platforms like Acorns allow you to turn your spare change from everyday purchases into an investment opportunity.

Once you link all your cards, Acorns will automatically round up all expenses to the nearest dollar and set aside the difference. Once your savings hit $5, they are automatically invested in a smart investment portfolio.

So, when you buy your morning coffee for, say, $4.25, Acorns deducts $5 from your account and invests the difference in a diversified portfolio of ETFs managed by experts at Vanguard, BlackRock, etc. This way, your everyday purchases can start working for you behind the scenes.

The best part? You can get a $20 bonus investment when you sign up with Acorns today. All you need to do is set up a small monthly boost for your account.

Gold has historically been one of the assets investors turn to when they want a potential layer of protection against inflation.

Unlike cash, which loses purchasing power as inflation climbs, gold’s value is not tied to any single currency or economy. During periods of economic stress — from geopolitical conflicts to market sell-offs — gold typically acts as a hedge against those market risks.

Opening a gold IRA with the help of Goldco allows you to invest in gold and other precious metals in physical forms while also providing the significant tax advantages of an IRA.

With a minimum purchase of $10,000, Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver.

If you’re curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today.

— With files from Vawn Himmelsbach

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The Washington Post (1); U.S. Federal Reserve (2); Bureau of Labor Statistics (3); USAFacts (4); Federal Reserve Bank of New York (5); Bankrate (6); CNBC (7), (12); E*TRADE (8); Marcus by Goldman Sachs (9); TreasuryDirect (10), (11); iShares by BlackRock (13); Investopedia (14); Investor.gov (15); Investopedia (16); MarketWatch (17)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.