Costco had a few surprises in store. Photo / Michael Craig
OPINION
Personal finance isn’t a hamster wheel with the same stories coming around and around. There is some of that. But every year there are new concepts, new takes on the tried and tested, and new jaw-dropping moments.
In 2023 I wrote articles about everything from the cost of Costco, to how banks fail to protect customers from scams.
Let’s start with Costco. Back in January, I and three friends jumped in the car and headed west to the bright lights of Costco.
The biggest shock was that one of my friends, whom we’d only called en route to the West Auckland store, spent a staggering $900.
What I found personally is that most of the items I wanted to put in my trolley were more expensive than PAK’n’SAVE. The few that were cheap, such as cheddar cheese, were produced overseas and I’d rather support New Zealand food producers.
The other thing I learned from that article is not to criticise people’s toilet paper choices. Sure, toilet paper is cheaper at PAK’n’SAVE. Readers told me: “hands off our toilet paper”. Kiwis really like wiping their bums with Kirkland three-ply.
Another eye-opener this year was how remiss our banks are in protecting customers from scams.
I’ve been aware for a long time that New Zealand banks don’t match the payee name with the account when we make payments, which is standard practice in countries such as the UK.
If the bank account name doesn’t match the person or organisation you think you’re paying, the payment will be stopped, saving many a potential scam victim. When I asked Payments NZ why it had ditched a trial of matching here, I was blown away by the Kafkaesque explanations.
Matching was a side angle to the article I was writing, so most of the interaction didn’t see the light of day. Six months later, I’m still speechless.
Another eye-opener for me on the fraud/scam front this year was how artificial intelligence (AI) facilitates scammers.
Bad actors need just a few minutes of a voice recording on social media or elsewhere, to mimic someone’s voice using AI. I watched one video where a journalist listened to his father being fooled that a computer-generated voice was his son’s.
One mother told CBS News that she picked up the phone to hear the voice of her 15-year-old daughter crying: “Mom, these bad men have me. Help me, help me, help me.” The girl was safely tucked up in bed at home, however. Had she been away somewhere, the mother could have been fooled into paying a ransom.
Liam Dann provided me with another interesting insight into personal finance 2023-style. That is, when times get tough financially, people go on holiday. Dann on The Front Page podcast said he’d been caught off guard by the reason why New Zealanders are not saving enough.
“I thought our savings rates would be down because of the high cost of living, but then I read through the release from Stats NZ and they found that the biggest drivers in increased spending for Kiwis were things like increased travel,” Dann said.
In a similar vein of savers behaving badly, mortgage adviser Neville Modlin made my eyes bulge when I was writing for OneRoof about how homeowners were coping with new higher mortgage repayments.
Modlin’s clients were waking up panicking about mortgage rate increases, he said. When I asked if he was recommending to sleepless clients that they extend their mortgage terms from 25 to 30 years to reduce payments, he said “no”.
This was the reasoning: “When you look at the customers’ spending on Netflix, Spotify, Disney Channel, takeaways ... it hasn’t decreased. It’s very hard to justify jumping from 25 to 30 years when they haven’t made any sacrifices as yet. They’re not sleeping at night, and yet they’re not changing their lifestyle.”
I finally managed to do a deep dive on meal kit prices in 2023. Meal kits such as My Food Bag, Bargain Box, and Hello Fresh are a wonderful way to cook dinner, if you have the money and you’re not one of the subset of people who get stressed by them.
When a Canstar survey turned up a result that a good chunk of customers believed they were saving money by using meal kits, I took on the challenge, ordered a meal kit, and priced every single ingredient right down to the last quarter teaspoon of salt.
I can say hand on heart that meal kits cost considerably more than ordinary home cooking.
A spat between a couple of other personal finance writers over the merits of spending less versus earning more got me thinking. One argued that people could save for a home if they cut out the proverbial lattes and smashed avocado.
The other said this was out of touch and what mattered was earning more, not spending less. My take on the argument is that it’s “and and”. Getting ahead requires that you do a bit of everything. Educate yourself, earn more, spend less, save and invest. Doing just one thing isn’t enough.
When it comes to the money saving “and”, I’m always looking for new tips.
A random money-saving tip I saw in a social media group stopped me in my tracks. This is it: homemade puddings make a meal go further for less. I had always considered puddings to be a luxury. But the maths put forward by multiple members in the group did make sense, financially at least. Let’s not talk about waistlines.
Unfortunately, home-grown money-saving tips are being eaten alive by new and clever ways to make us spend.
Airlines, hotels, and Uber have long raised and lowered prices for their product according to demand. Back in September, I read a somewhat disturbing article in the UK’s Financial Times. Surge pricing and its close cousin dynamic pricing are going to become a whole lot more common.
Under these models, prices move up and down according to demand surges and/or customer dynamics. Some bars in the UK are already charging more at peak times. Online retailers are also most likely using AI to increase prices when they detect that we’re super interested in a particular product.
Plenty of big stuff happened in New Zealand this year. Like an election. This article isn’t meant to be an all-encompassing summary of 2023. Just some of the more interesting anecdotes from the year.
Demand for bonds may well stay strong, but there's a catch.