5 financial lessons from 2023 to carry into 2024
As we start the new year, what are 5 lessons from 2023 we can carry into 2024.
As we start the new year, what are 5 lessons from 2023 we can carry into 2024.
The 2020s have shaken up the world as we know it, and we’re only four years in. A pandemic, economic volatility, inflation, rising interest rates and the cost-of-living crisis have affected us all. Those with savings have taken advantage of higher interest rates, however maybe you’ve had to use your savings to keep afloat or spend on a higher house deposit or mortgage repayments.
There’s freedom and power in focusing on what you can control and letting go of what you have no control of.
Control the controllables: spending, expenses, income and saving.
We can’t control interest rates and inflation, but we can control our money habits and behaviours, our spending and our income.
As we start the new year, what are 5 lessons from 2023 we can carry into 2024.
No one saw the cash rate moving to 4.35%, the highest level in 12 years, nor inflation persistent at 6.8% (but feeling more like 14% when electricity, essential food items were over 10% higher and petrol was up to 17% 14%.
2024 areas of uncertainty will include the US Presidential elections later this year, the possible flare-up in the geopolitical issues from 2023 and China's economy and property sector.
Having an emergency savings and cash buffer is essential for financially resilience.
If you’re starting your cash buffer and emergency accounts from a low base, look aroundyour home for items you’re not using, can they be sold or hired out to give you extra cash.
I get that times are financially harder now than they have been, however it’s worth looking at the overall financial climate with a greater and long term view. While cost of living and rates went up, so did your super balance, house values(for the 2 in 3 Australians that own property) and if you invested in shares last year – the ASX went up 8%.
The economy moves in cycles so this period of high inflation will also pass. The RBA is expecting the inflation rate to be around 3.5% by the end of the year. The Australian economy is in good shape, we avoided a recession and there’s an expectation of about a 2% growth rate. More Australians have a job than ever before, since 1963, actually.
It's a case of hold tight and ride it out.
AI went mainstream in 2023 – does anyone not use ChatGPT? While I don’t recommend using AI tools like Chat for investment advice. But I do think it’s a great tool to help understand or expand fundamental financial concepts. ChatGPT also can help you translate what you might have heard from a financial educator or in the media.
When facilitating workshops on money, I regularly find participants afraid to ask questions for fear of sounding uneducated or dumb, but there’s no judgment coming from an AI tool (me either actually!). Giving additional AI prompts like “explain it at fifth grade level” or “explain it in simpler terms” can help you translate any financial jargon that may give you anxiety or confusion when wanting to expand your financial knowledge.
In a world where material success is often equated with personal $ worth, it's worthwhile taking a step back and critically examine the societal norms surrounding wealth. We saw a lot more of this in 2023. Those ranged from the debate between renting vs buying a home to the rise of quiet luxury, where we saw a noticeable shift away from brand name fashion to classic and simple aesthetics.
Wealth should not solely be measured by monetary value. True prosperity encompasses emotional well-being, meaningful relationships, and personal fulfillment. Challenging the emphasis from material accumulation allows for a more holistic perspective on what it means to live a successful life.
As you form your financial goals for 2024, ask yourself, “Is this what I really want? Or do I think I want this because that’s what I’m supposed to do?”
Question these norms to manage your personal finances according to your values, rather than others’ in what’s likely to be another unpredictable year.
With the evolution of technology, online criminals and how you protect your finances and assets has now become an important part of everyone’s personal finances. A trend to follow closely in 2024 is the cybersecurity industry, and how it can be used to best protect yourself. Consider looking into investing in up-to-date software, or systems so as to help guard yourself from various threats.
You should also spend time educating yourself on the various scams, and phishing tactics (like embedding malware in QR codes of public places – scary!) so you know what to look out for, and how to deal with them when you are confronted by them.
What lessons did you learn this year?
I’d love to hear from you.
K X
Warmest,
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