When most people think of the financial impact of climate change, they think of headline-grabbing carbon taxes that promise to raise the prices at the pumps.

They aren't wrong to think about how these federal incentives will affect the average person and their budget. But these costs pale in comparison to how climate change is already increasing your everyday costs. 

Have you noticed your grocery bills have started to take a bigger chomp out of your finances? What about utility bills and insurance premiums? Climate change's impact on these everyday expenses is growing with each year. 

How Does Climate Change Impact Your Monthly Budget? 

Here are just a few examples of how global climate change has a real impact on your everyday personal budget.

Food Prices

Inflation isn't your only concern when you shop for groceries on a budget. Climate change is another reason why you are paying more at the till. That's because climate change interferes with the world's food producers' ability to grow and ship legumes, produce, and grain. 

Climate change raises temperatures, shifts growing seasons, changes familiar precipitation levels, and introduces new pests to growing areas. Farmers also face the increased chance of extreme weather events (like flooding and fires) that may interrupt their growing season - or destroy their harvest entirely. 

Finding solutions to these challenges introduces new costs that are passed down to customers. At the same time, climate change increases food insecurity. 

Energy Costs

Climate change has a direct impact on the utility bills you pay every month. As the summers get hotter and the winters get colder, you'll rely on more energy to cool and heat your home. 

The increase in heat waves, cold-weather events, severe drought, and intense rainfall also put additional strain on the country's energy system. You may face critical outages and trickle-down costs as service providers improve their infrastructure. 

Insurance Premiums

Let's talk about those extreme weather events and how they affect your home. Floods can damage your foundation and ruin a finished basement. Excessive windstorms, tornadoes, or hurricanes can fell trees,tear shingles off your roof, and cause severe structural damage to your home. Snowstorms and deep freezes can lead to frozen and burst pipes. Wildfires can raze whole communities in a matter of hours. 

These natural disasters cause large-scale damage to your home that comes with a price tag match. Most homeowners get insurance to help them cover these costs they can't afford on their own. If you're lucky, you also have a solid emergency fund to fall back on when you have to cover out-of-pocket repairs.

Unfortunately, the increase (and intensity) of natural disasters has caused the insurance industry to raise its prices. From 2021 to 2022, the average homeowner policy premium rose by 12.1%. Trusted names in the industry expect premiums to rise as much as 5.3% each year from now on. 

How Can You Handle These Changes to Your Budget? 

Here are some ideas on how you can prepare for these increasing costs. 

Reorganize Your Budget

The first thing you should do is check in with your budget. Track your spending to see how these everyday expenses have already gone up and affected your cashflow. It's also a good idea to see how your estimated costs will change how your budget balances.

Your budget operates on a finite income, so when the essentials take a bigger portion of your paycheck, you have two options. One, you increase what earn by getting a new job. Or two, you reduce non-essential spending so that you can free up more cash to put towards groceries and utilities. 

You might be able to balance your budget after sacrificing a few subscriptions and cutting your takeout in half. 

Start Saving for Emergencies

Emergency savings is one expense you should never cut from your budget. This fund is there to help in case you can't handle an unexpected, urgent expense. 

Let's say a windstorm fells a tree that hits your roof. You can dip into this fund to pay the deductible before your insurance handles the rest of the repairs. Alternatively, you can rely on these savings if your groceries take up more of your budget one month, and you have fewer expendable cash to handle an unexpected car repair. 

Have a Cushion

Consider this: 42% of Americans have less than $1,000 in savings. That happens to be the cost of the average homeowner's insurance deductible, which means nearly half of the country can cover this out-of-pocket expense without help. 

If you have just started your savings journey, you should know your financial backup. For most people, this is a credit card. But if you don't have any space on this account, you may consider an online loan as a backup.

Online loans come in two main forms - cash installment loans and line of credit loans. If you need to apply today for assistance, take the time to decide which online loan fits your emergency best. This can help you manage the cost of borrowing. 

Find Savings in Your Everyday Essentials 

While climate change will increase the prices you pay on groceries, energy, and insurance, you can find ways to reduce your spending to save money. Here are some ideas:

Groceries:

Planning your meals around reduced items, flyer deals, and coupons can help you fill your cupboards (and stomach) with tasty, nutritious food that doesn't cost a fortune. Try embracing meat- and dairy-free meals as often as you can, as these items are the hardest hit by inflation.

Energy: 

Eliminating drafts is one of the most important things you can do to save money on heating and cooling your home. Installing or repairing the weatherstripping around doors and windows could save as much as 15% on your bills. Check out these other tips to save energy in other ways.   

Insurance: 

Comparison shop between multiple insurers to find the best rate. If another company promises lower premiums, call your current provider to see if they're willing to match these prices or go even lower to reward your loyalty. Adjusting your deductibles may also impact your premiums, but do so carefully to ensure you get the coverage you need in an emergency.

The Takeaway:

Climate change isn't a problem for tomorrow's budget; it's affecting the prices you pay today. That's why it's so important you follow the tips you learned here today. Budgeting with climate change in mind can help you weather these costs.