Money lessons from 2024 to take into 2025

There’s nothing like seeing the calendar switch over into a new year to focus your mind on the lessons learnt from the previous 12 months.

You might be thinking about what you achieved, what went well and what could have been better.

And if you’re setting some goals for 2025, the experience of 2024 may be a great help to guide you.

Here are some key money lessons from this year that could help set you up for success in the months ahead.

Interest rates change

If there’s one thing you can rely on, it’s that interest rates rarely stay the same for long.

While home loan rates rose sharply from the middle of 2022, 2024 was the year in which some people started to feel the squeeze come to an end.

We saw interest rates drop from the middle of the year, in anticipation of the Reserve Bank cutting the official cash rate in August. For some homeowners, this allowed a bit more space in the household budget while others opted to keep their repayments the same and start paying off their home loans faster.

The period of higher interest rates may have been a useful reminder to many people of the importance of having an emergency fund.

When regular payments, like your home loan, are higher, there might be less space in the budget for emergencies. But having a backup fund there, just in case, can help get you through without the need for expensive debt.

Inflation cooled

Inflation dropped back to the Reserve Bank’s target band through 2024, which was a relief to many New Zealanders.

The inflation experience of recent years, though, is a reminder that it’s important to invest in assets that help the value of your portfolio grow beyond the rate of inflation. Cash in the bank, for example, drops in value in real terms when it doesn’t keep up with inflation.

Unemployment rose

The unemployment rate rose during the year, and people’s incomes generally lifted more slowly.

This could have been a good reminder that simple financial hygiene steps like maintaining a household budget can be helpful during periods when money is tighter – either because costs are rising or your income is reduced.

Sharemarkets fluctuate

Sharemarkets around the world have gone through volatile periods throughout the year.

It’s a reminder that even though investments in equities can move around in value, they usually recover relatively quickly – and often to a higher level than they were previously. But investments should line up with your risk profile so you’re not caught out.

It’s also a great indication that a well-diversified portfolio is usually your best strategy to reduce your risk. Anyone who was diversified geographically or across multiple asset classes would have felt less of an impact from this year’s market movements.

Get set for 2025

The coming year may be an easier one for many New Zealand households but being prepared and having a great financial strategy can be a big help, no matter what the wider economy is doing.

If you’d like an expert on your side, get in touch with us. Partnering with a financial adviser can provide clarity, confidence, and tailored strategies to thrive in 2025.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.