Climate change is usually assessed in scientific terms – rising temperatures, sea levels and carbon emissions. But increasingly, it can also be measured in household bills – higher insurance premiums, steeper energy charges and growing costs to protect homes, travel and health. So when US President Donald Trump said recently that abandoning a key government ruling on greenhouse gases would make cars cheaper for Americans, he was focusing on a tiny piece of a huge picture.

That is because climate change is not a local problem that hits one place at a time. It is increasingly a widespread financial risk, pushing on several parts of household finances at once. When risks become systemic, people cannot simply “insure it away” or plan around it.

When Trump announced he was revoking the US’s 2009 “endangerment finding”, which set out how greenhouse gas buildup harms human health and wellbeing, he said the move would save Americans “trillions of dollars”.

But climate change shows up directly in household budgets as pressures converge. These pressures could include insurance becoming unaffordable or even unavailable, which can then have knock-on effects on property values. On top of that, utility costs can creep up, wages may become less reliable, and retirement savings are exposed to climate-driven shocks.

For many families, their home is their largest financial asset. But climate risk is increasingly being priced into property markets. Research suggests that in the United States, homes exposed to flood risk may be overvalued by between US$121 billion and US$237 billion (£89 billion and £174 billion). The First Street Foundation, an independent climate risk research organisation, estimates that climate risk could wipe out as much as US$1.47 trillion in US home values by 2055.

In the UK, evidence shows that house prices in English postcodes affected by inland flooding fell by an average of 25% compared with similar non-flooded areas. Coastal flooding in England has been associated with price reductions of roughly 21%. The Environment Agency estimates that one in four homes in England could be at risk of flooding by the middle of the century.

Insurance is expensive – or unavailable

Many governments have tried to prevent climate risk from pricing people out of insurance by creating schemes of last resort. These government-backed initiatives keep policies available when the market would otherwise withdraw. But this safety net is now under growing financial strain.

In the US, the National Flood Insurance Program (NFIP) has accumulated more than US$22 billion in debt to the US Treasury after repeated borrowing to cover claims.

Meanwhile, in the UK, Flood Re was designed to buy time for adaptation while keeping flood insurance affordable. Yet rising claims have driven up reinsurance costs by around £100 million for 2025/26. France also had to increase the mandatory surcharge on its national “Cat Nat” natural catastrophe scheme from 12% to 20% from January 2025 to maintain financial stability.

Climate change affects households even if they do not own property. As utilities invest in stronger, more resilient infrastructure, those costs are usually recovered through higher standing charges and tariffs. In other words, the price of adaptation is quietly passed on through monthly bills. In California, for example, wildfire-related grid upgrades added 7% to nearly 13% to household energy bills in 2023.

The same logic applies to cars. Rolling back US vehicle emissions rules is being sold to American consumers as cutting US$2,400 off the price of a new car. But that sum isn’t a cheque to ordinary Americans. Carmakers are not required to pass the saving on, petrol drivers can end up paying more at the pump, and EVs still come with a high upfront price tag.

In reality, the figure is best understood as an estimated reduction in manufacturers’ compliance costs, not a guaranteed discount at the dealership.

Climate change doesn’t only put pressure on household budgets. It also threatens the thing many families rely on most: a steady pay cheque. Large parts of the economy worldwide still depend on work that happens outdoors from agriculture and construction to tourism, deliveries and logistics. The 2022 California drought cost farming around US$1.7 billion in revenue and nearly 12,000 job losses.

There are also direct health costs. The International Labour Organization warns that climate hazards expose workers to a “cocktail” of risks, including heat stress, air pollution, ultraviolet radiation and physical injury.

It estimates that 2.4 billion workers around the world could be exposed to climate-related health hazards. Excessive heat already affects about 70% of the global workforce, contributing to 18,970 work-related deaths and roughly 23 million workplace injuries each year.

Climate change is increasingly seen by regulators and investors as a systemic risk that can undermine the pensions people rely on in retirement. Risk management technology firm Ortec Finance warns that failing to transition to a low-carbon global economy could reduce pension fund returns worldwide by around 33% by 2050.

Physical risks (floods, heatwaves and storms) can damage assets and disrupt productivity. Transition risks (policy shifts and sudden repricing of carbon-intensive assets) can hit valuations. Together, they weaken the performance of equities, property and infrastructure.

When climate risk is systemic, there’s no bargain to be made: short-term “savings” don’t reduce household costs, they are repaid soon through higher bills. Rather than driving up the cost of living, climate policy helps to stop climate shocks from raising prices even faster.