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With the exception of certain valuable items and collectibles, nearly everything inside our homes is depreciating. Meanwhile, the replacement prices for our personal belongings continue to rise with inflation. If you have recently been shopping for home furnishings, appliances, apparel, footwear, decor or bedding, you have seen the effects of inflation on prices.

The cost of everything is going up. The cost of materials and labor to produce every item in our homes is rising. The cost of transportation to deliver everyday household items is increasing. According to the US Bureau of Labor Statistics, the CPI (Consumer Price Index) is on the rise: Over the last 12 months, the all-items index increased 8.5% before seasonal adjustment.

In such uncertain economic conditions, we spend more time making decisions about our budgets and looking for opportunities to improve our household financial situations. Feeling insecure about finances can create anxiety, which carries over into other areas of our lives.

Securing Your Finances

As homeowners, we can add to the feeling of security about our finances by putting protection in place to avoid significant losses. While there is plenty of effort exerted in the public sphere to appeal to our desire for gain, it is often done at the expense of the other side of the equation. Feeling secure about our finances includes achieving gains, and it also includes avoiding losses.

As we consider the CPI and the potential consequences of a catastrophic event, avoiding losses means having the protection that keeps pace with the CPI. Being in a position to replace everything we own if that ever became necessary can add to our feeling of security.

Planning for the Unexpected

A common misconception when thinking about protecting our personal property, or anything we own, is considering the “likelihood” that a catastrophic event will occur. Over time, we learn that despite our best efforts to plan, prevent and take precautions, life is totally unpredictable.

Instead of thinking about the likelihood of a catastrophic event, which we cannot predict, we can shift our thinking to the “consequences” of a catastrophic event. We can ask ourselves, “If a catastrophic event were to occur and all my belongings needed replacing, what would I like to see happen?” In other words, who would bear the consequences of the catastrophe? As a homeowner, we can transfer the consequences to our insurance carrier, with the exception of our deductible. An annual review of our policy limits will help us determine if we are keeping pace with inflation.

When an unexpected event occurs, we have a heightened level of interest in our coverage. To build a feeling of security, we can schedule an annual review to ensure our current circumstances are adequately considered in our coverage.

The #1 takeaway today is to think not in terms of likelihood but in terms of consequences. In an upcoming conversation, we will talk about sharing consequences in the form of your policy deductible. Until then, enjoy the journey as a Happy Homeowner and remember, “The Best Is Yet To Come.”

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