February 28, 2023

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Good day. Can you guess where in the world is a tall Starbucks latte the most expensive? a. Canada, b. Argentina, c. Switzerland. Follow the wave 🌊 below for the answer.

The money topics today are:

How much does it cost to build a home?
CDs are now offering 5% yields
Do you need travel insurance?

HOUSING

How Much Does it Cost to Build a Home?

Welcome to the wonderful world of home building, where the excitement of creating your dream home is only ever rivaled by the terror of discovering how much it's going to cost.

But in a housing market that's become so costly in recent years, might it actually make sense to build a home?

What's worth knowing

The averages: According to HomeAdvisor, the average cost to build a home right now is $283,600, with a general range for most new homes falling between $109,000 and $459,000. Safe to say, the cost to build varies widely, and depends on a lot of factors.
Market comparison: According to Zillow, the average home value for the entire US is $328,745. This varies widely though. The average California home value is $716,909, whereas the average home value in Louisiana is $186,795. What it costs to buy will depend almost entirely on your location and home details.
Most expensive parts: Certain parts of the home building process are more costly and arduous than others. For instance, purchasing the land to build on could cost anywhere from $3,000 to $150,000 or more depending on lot size and location. You'll also have to consider the costs of clearing and grading the land, permit costs, the foundation and framing, and of course the labor and supplies on top of it all.
Your aspirations and your budget will come together to decide what makes the most sense for you — build or buy. If you want a certain piece of land, a unique home, or want to build something that'll stay in the family for generations, and your budget can accommodate it, then building may be the choice for you.
On the other hand, if you're simply considering a build as a cheaper option, things can get more complicated quickly. You'll have to do some math and compare what's available on the market with what you want and can afford, and then get some valid estimates on what a similar new build would cost.

Take this related lesson on this topic and earn Dibs 🟡 while you're at it:

Budgeting Basics

Budgeting & Saving

6 mins

SAVING MORE

CDs are Now Offering 5% Yields

Certificates of deposit (CDs) are an often overlooked alternative when you're looking for somewhere safe to store your money for a long period of time. Unlike most savings accounts, CDs usually require a minimum deposit and always require an agreed upon "lock-up" period during which accountholders cannot access their funds.

While that might seem like it's a bit stringent and inflexible, those tradeoffs come with a reward by way of higher interest rates. Right now, the average savings account rate is about 0.23% across the U.S., whereas the average CD yield is almost 5 times that at 1.36%.

But those averages are skewed downward by those bottom-of-the-barrel rates out there, and you can do much better.

Where to look and what to know

CD precautions: When it comes to the drawbacks of CDs, the main thing to be aware of is their lack of liquidity. CDs usually can't be accessed from 3 months to 5 years, and an early withdrawal will trigger a penalty. These penalties vary from bank to bank and depend on the length of your term, but they usually come in the form of missing out on anywhere from 90 days to 6 months of interest payments.
Is a CD for you? CDs are ideal for savers who'd like to earn a higher, risk-free return on their money. Generally, CDs are not used to stash an emergency fund, but rather a secondary safe haven for money you have after you've built up your emergency savings and started investing.
Finding the highest rate: The average APY of a CD right now may be 1.36%, but much higher offers can easily be found. Capital One and BMO Harris are both offering yields of 5% with term lengths of less than a year, and there are countless others like Barclays and Synchrony offering rates in the 4% range. The best place to look for a competitive rate is likely with an online bank, and not a brick-and-mortar establishment.

Take this related lesson on this topic and earn Dibs 🟡 while you're at it:

Saving More

Budgeting & Saving

8 mins

MONEY TIP

Do You Need Travel Insurance?

Insurance is one of those necessities that oftentimes disguises itself as an optional expense. It can seem like a waste of money at times, especially if it's not needed. And yet, as soon as it comes in handy once, you'd never go without again.

Travel insurance is perhaps the trickiest of all policies. It's an added trip expense that is often confusing, complex, and sometimes unnecessary. So, how do you know when to pay up for this added trip tax?

Key considerations for travel insurance

Health insurance: When you're traveling abroad, health insurance is the most important factor. Most domestic health insurance plans have limited coverage internationally, so going on any lengthier stay in another country puts you at risk of lofty and foreign medical debts in the event of a problem. Luckily, travel health insurance plans are relatively affordable according to the cost and length of your trip.
Trip coverage: No one wants to get stuck having wasted thousands on a trip just because of some uncontrollable factor like a cancellation or delay. This is where trip coverage comes in and reimburses you for the cost of some or all of your trip expenses depending on the situation. Is it worth the purchase? If you think interruptions are likely and don't have any secondary coverage through your credit card, then trip coverage can be money well spent.
Consider credit cards: There's a litany of well-known credit cards out there that provide some extent of travel insurance to their cardholders. The catch is that you usually must make your trip purchases on that exact card for them to be eligible, and the coverage of certain items will vary from card to card.
How to save on costs: Don't automatically opt in for the added insurance on those booking sites. Instead, look elsewhere first for an all-encompassing bundle-type policy that may cover more things for less. Additionally, don't overdo it with the coverage and sky-high coverage limits. Check on travel insurance sites like InsureMyTrip, AARDY, or Allianz Travel to learn more and compare quotes too.

🌊 BY THE WAY

🗻 Answer: Switzerland it is. A tall Starbucks latte will cost you $7.17 there. Denmark is next at $6.55, followed by Finland at $5.67. In Canada, a tall Starbucks latte will cost you $3.85, and in Argentina, it'll be $4.67. See the full list (Visual Capitalist)
🧱 Will construction costs go down in 2023? (Build Method Construction)
☕ ICYMI. 20-cent coffee. What's the catch? (Finny)
🪧 This tech company has a daily message for employees: 'Please go home!' (NBC)
🤝🏽 Finny lesson of the day. As questions from prospective home buyers come in about whether they should hire a real estate agent, here's a relevant lesson on the topic:

Choosing a Real Estate Agent

Housing

5 mins

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Finny is a financial wellness platform. The Gist is Finny's twice-a-week (Tues & Thurs) newsletter covering personal finance, market trends and investing insights. The content team: Austin Payne, Carla Olson. Finny does not offer investment and stock advice.

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