🍽️ Tame Your Wild Home Premiums

Welcome back, Future Funder!

From the head-scratching rise in home insurance costs to the ongoing budget squeeze of inflation. Ever feel like you need a translator for finance-speak? We'll also peek into how the big banks are weathering the economic storm (spoiler: they're feeling the pinch too). For dessert, we've got the Goonies with a side of savings. Let’s dig in!

On the menu today

• Rising Home Premiums: What’s the deal? 🏠💸

• Charts & Trends: Family Finance in Flux 📊

• Back to School: Financing without the fancy words 🎓

• Banks and inflation: A parent's guide to the headlines 🏦

• Creative Finance - Art Edition: Goonies-style 🗺️💰

FAMILY FORCAST

The Cost of Keeping a Roof Over Your Head 🏡💸

Let's break it down. Home insurance rates are going up, up, up - and families in areas with low risk of natural disasters are feeling the pinch the most. It's a head-scratcher that reveals some cracks in the system.

• Climate change is making home insurance companies sweat, driving up rates across the U.S. But the hikes don't always line up with actual risk levels.

• Studies show states with looser regulations on insurance are letting companies charge higher premiums, even in neighborhoods where disasters are rare.

• Between 2020-2023, the national average for home insurance premiums surged by a staggering 33%. Rural and underserved communities got hit hardest.

• With rates rising faster than a rocket launch, the Senate is looking into shaking up regulations to keep premiums from going off the rails.

Why This Matters: Owning a home is part of the American dream. But with insurance costs outpacing inflation, that dream is becoming a nightmare for some families. High premiums in safe areas could shake up local economies and put financial stability at risk for households already stretched thin.

What You Can Do: Shop around annually and consider bundling policies. Increase your deductible if feasible. Improve your home’s resilience with upgrades like storm shutters or smart devices. If struggling, contact your state's insurance department about assistance programs. Always prioritize adequate coverage for your family's needs - that’s most important. Here’s an additional 10 ideas.

Dinner Table Discussion: Here’s one for the kiddos. Let’s imagine a storm is coming, and we’re only allowed to bring 3 things - what are we each bringing, and why? 🍃

THIS WEEK’S POLL

*One-click, easy voting. Remain anonymous.

Our last poll, we asked: "Do you trust most financial professionals?"

Here's what you all had to say:

• Yes: 34.6% of parents

• No: 65.4% of parents 🏆

A healthy amount of skepticism for general advice out there! It's a good reminder of how important it is to vet a financial pro before bringing them into our family's money matters.

CHARTS & TRENDS

Family Finances in Flux 📉📈

Inflation's roller coaster is slowing, but families are still feeling the crunch. After hitting 9% in June 2022, inflation has cooled to 3% as of last week’s report. That's progress, but still above the Federal Reserve's 2% goal.

The big picture? Since April 2019, prices have jumped 23%. If inflation had behaved, we'd be looking at just 11%. This surge has reshaped family budgets, with some areas hit harder than others. Food prices? Up 27%. Filling up the minivan? Up 29%.

Not all families feel the pinch equally. Those with tighter budgets, spending about 83% on essentials like groceries and housing, have seen costs rise 22%. Middle-income families, at 75% for necessities, face a 20% bump. Higher earners, allocating 64% to must-haves, are looking at a 17.5% increase.

Let's break it down:

• Lower-income households: 22% increase (from $26,000 to $32,000+)

• Middle-income households: 20% increase

• Higher-income households: 17.5% increase (from $82,000 to nearly $100,000)

There's a bright spot, especially for those earning less. The lowest quarter of earners have seen an 8% rise in inflation-adjusted wages since March 2019. The top quarter? They're actually down 1%.

BACK TO SCHOOL

Today's Lesson: Financing 101 🫰

Imagine financing is like a time machine for your family's big dreams. It lets you bring future purchases – like a home, car, or college education – into the present. But remember, this time travel comes with a cost: you'll be paying back more than you borrowed, kind of like paying rent on that slice of the future you brought back with you. 💵

In simple terms: Financing is the process of obtaining funds to make purchases, start a business, or cover expenses. It's a way to access money you don't currently have, with the agreement to repay it over time, usually with interest.

Here's why it matters for families: Financing can help you achieve important goals, like buying a home or funding your child's education. However, it also comes with responsibilities and costs that can impact your household budget.

Let's break it down with a real-world example:

• Home mortgage: A common form of financing for families

• Car loans: Help spread the cost of a vehicle over time

• Credit cards: Offer short-term financing for everyday purchases

• Student loans: Assist in funding higher education

• Personal loans: Can cover unexpected expenses or consolidate debt

Picture this: Your family wants to buy a $300,000 home. With financing, you might make a $60,000 down payment and borrow the remaining $240,000 from a bank. You'll repay this amount, plus interest, over 15-30 years.

How does this affect your household? Financing allows you to make major purchases without paying the full amount upfront. However, it also means budgeting for monthly payments and factoring in interest costs when planning your family's financial future.

The Key Takeaway: Financing can be a powerful tool for achieving family goals, but it's crucial to understand the terms, shop around for the best rates, and ensure the repayment plan fits comfortably within your budget. 🏡💰

FINANCING - IN THE NEWS

Banks Battle Inflation's Burn 💸 

Inflation's keeping major U.S. banks on their toes. JPMorgan Chase, Wells Fargo, and Citi's recent earnings exposed the financial pinch these giants are feeling. Yeah, inflation's cooled a bit, but the overall money scene's still hot 🥵 - and high interest rates aren't helping.

JPMorgan and Wells saw deposits drop as interest rates for checking and savings climbed. Sure, loan profits could go up with higher rates. But pricier borrowing also puts a damper on demand - not ideal for bank bottom lines. Wells' net interest income fell 9% to $11.9B as businesses pumped the brakes on loans. That's a sign of families and companies tightening their belts amid pricier financing for big-ticket items like homes and degrees.

Citi too is battling the inflation sting, taking hits from its consumer lending biz. When prices and rates run high, economic jitters make folks - and banks - more cautious about spending and lending. For families, it means higher costs across the board, from loans to mortgages, plus potential credit crunches.

_{*One-click, see result. Remain anonymous.}

The Message? Smart families stay prepared and circumspect when banks brave the inflation storm. A little savvy can keep us ahead of rates run amok.

LET’S GO AROUND THE TABLE

Everything else you need to know today

• Bond Strategies for Uncertain Times. Explore how bonds could provide stability for your family's investments. Experts evaluate their potential in today's market and discuss emerging alternatives. Is it time to reassess your portfolio?  Read the full article here.

• Costco Membership Fee Increase. Attention bulk shoppers: Costco is raising prices for the first time in 7 years. Learn how this might affect your family's budget and whether the savings still outweigh the costs. Read the full article here.

• Roth IRA Conversions for Gen X. Discover how this tax strategy could boost your retirement savings. Learn about the potential benefits and risks for your family's long-term financial planning. Read the full article here.

• AT&T's Data Breach Alert: Is your family's personal information at risk? A major breach has exposed 24 million customer records. Learn what data was compromised, how to check if you're affected, and steps to protect your family's digital security. Read the full article here.

• College Cost Crisis: Is your teen's dream school becoming a financial nightmare? Take a peek how families are navigating the skyrocketing tuition, exploring creative funding solutions, and rethinking the ROI of higher education. Read the full article here.

💘 Charades and love? Family game night turns romantic as this week’s couple just raised the bar, turning a round of charades into a surprise proposal. Watch the video here.

CREATIVE FINANCE - ART EDITION

Goonies Never Say Bankrupt! 🏴‍☠️💰🗺️

🧙‍♀️ Your wish is our command

Thanks for reading.

Until next time!

The Future Funders Team 🍽️

p.s. If you liked this newsletter, share it with your friends and colleagues here.