Kiwis lose over $180billion in 2022

Every month I go through a process of calculating my net worth. A lot of you will hopefully have picked up this habit too.

Your total assets minus your total liabilities. In accounting, we call this a balance sheet or a statement of financial position. Your bank will most likely ask for your one when you borrow.

It’s a great way to keep an eye on what is happening in your financial life, monthly. What assets do you have? What liabilities/debts do you have?

From there, you can make choices and changes. I.e. increasing assets or decreasing debts.

Paying down debt is a great play at present with interest rates being so high meaning you get a guaranteed return.

Obviously, for most people, they hope that over time their assets will trend up and debts trend down.

Statistics New Zealand regularly do the same calculation for all New Zealand households too.

They have just released data for the end of September 2022. It says that household net worth sits at $2,250 billion. This is all assets owned by Kiwi households less the value of all their debts.

It was $2,428 billion in December 2021 which was the height of the asset(s) bubble and before things started to really turn.

If you’ve been worried about your house price, shares or KiwiSaver, you’re not the only one.

In the first nine months of 2022, household net worth dropped by $179.4 billion (7.4)%.

When Statistics NZ release the December 2022 data you could be pretty sure it would have dropped again. Perhaps kiwis will have lost $225billion plus in 2022?

This is happening because house prices continue to drop, stock markets do too and household debt is increasing.

But does it really matter unless you’re trying to leverage off your asset prices? Or needing the wealth soon?

Asset values going down isn’t great for the ‘wealth effect’ where we ‘feel’ like we are less ‘wealthy’ but often for many of us, we may over think it, because if we zoom out we are still making progress over time.

That’s why consistent healthy habits are so important to combat us from freaking out periodically throughout the year.

Remember too that during that real bubbly time we all got so hooked on, (from March 2020 to December 2021) household net worth went up by $620 billion.

The other interesting data from Stats NZ was around savings for kiwi households. Back in March 2022 people were really struggling to save any of their disposable income and basically everything earnt was spent.

What about you? Have you been able to increase your savings?

The June & September ‘saving ratio’ data suggests that savings are on the way up.

The saving ratio, which compares household savings to net disposable income, is at 3.9%, up from 3.1% in the June quarter. An increase in the saving ratio means that households are saving relatively more of their disposable income - Stats NZ.

That is pretty good when you consider prices have been continuing to rise. You have all obviously been asking for pay rises or perhaps making some extra income.

Of course, this week, Stats NZ also told us that inflation for the December 2022 quarter was 1.4%. Meaning our annual inflation rate at the end of the year sits at 7.2%.

I think that money really is on the minds of a lot more Kiwis right now and that’s a good and bad thing.

We know it can be a great source of worry for many people and something we can be a bit ashamed to ask for help around.

Again, never be too ashamed to ask for help.?

Have a brilliant weekend,

Luke

P.s. You are one of?6,750+?recipients. Know?someone you could share this with?

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Did you know:??4.5%?of consumers with credit are currently 30+ days past due. Nearly 1/20 kiwis. This is up from 4.2% just last month.

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