Will Saving Money Get Easier in 2023?

It could, if this one thing happens.

If you're having a hard time putting money into your savings account these days, you're in good company. In fact, a lot of people are dipping into their savings to cover rising grocery, utility, and rent costs, among others.

Why has everything gotten so darn expensive? We can thank inflation for that.

Last year, Americans received a generous round of stimulus checks, and parents were eligible for a boosted Child Tax Credit, half of which they received in monthly installments. But while that was happening, supply chains were starting to slow down due to the effects of the pandemic. That created a major disconnect between supply and demand, and until that gap is bridged, inflation could continue to run rampant.

But there's reason to believe inflation levels will cool come 2023. And so if you're struggling to build up your savings now, you may find that things do, in fact, get easier next year.

Why inflation could slow down

In order for inflation to cool, consumers need a reason to stop spending. And the Federal Reserve is giving them one.

The Fed has been implementing interest rate hikes that are increasingly driving the cost of borrowing up. And the Fed isn't done -- it has plans to keep moving forward with rate hikes until inflation readings look more favorable.

What this means is that there's a good chance that come next year, inflation will have moderated as a result of reduced consumer spending. And if you're not forced to pay as much for essential expenses, it should free up money to add to your savings.

Of course, the hope in all of this is that consumers don't cut back on spending to an extreme degree due to higher borrowing costs. If that were to happen, it could spur a recession, which could lead to widespread unemployment and other unfavorable economic consequences.

But despite that risk, the Fed feels that interest rate hikes are really the only way to break the current cycle. And so we'll have to hope that consumer spending drops just enough to bring the cost of living back down.

Other ways to save money

If inflation settles in 2023, it could work wonders for your savings. But sitting back and waiting for that to happen may not be your only option.

One thing you should know is that the current labor market is very strong, so you may have the option to find a better-paying job right now. Or, you can look at getting a second job and use the earnings from it to pad your savings.

Another option is to examine your spending habits carefully and think about ways to cut back. This doesn't mean you have to deny yourself every single luxury that makes life pleasant. But you may find that there are bills you can shed without suffering. If, for example, you order takeout every week because you don't feel like cooking, you may find that inviting friends over to cook together makes food prep more fun -- and at a fraction of the cost.

All told, there's reason to be hopeful inflation levels will drop in 2023. But it's also a good idea to take savings matters into your own hands, especially if you feel your cash reserves could use a boost.