Personal Finance: A Focus on Trends Observed in 2023

In 2023, various prominent trends were observed in personal finance, which were backed by digital innovation and tech-enabled services.

Here’s the lowdown on some of these trends in the personal finance domain, which include:

Financial protection: After the pandemic phase, financial safety has gained much significance as one of the crucial pillars of personal finance. In this regard, life insurance and health insurance are the most critical, besides securing other key assets.

Ensuring financial protection for you and your family is the gateway to financial immunity against different types of uncertainties.

Being clear on financial goals: This is one of the key aspects of personal finance planning. These goals could vary as per age and future preferences. For instance, the financial goal could be long-term, such as buying a house, or short-term, such as planning a vacation.

Among all these, it is also important to plan for retirement goals. In this regard, 2023 witnessed an uptick in demand for products related to pension and retirement planning, such as annuity, thus highlighting a trend towards retirement planning.

Tax planning: It remains important to ensure that all investments are undertaken in such a way as to ensure optimal tax payment. While saving, it is important to focus beyond the marketed returns to take stock of the total investment cost and compare it with the returns after tax.

Real estate and housing: The residential market sector has witnessed a strong uptick in demand in 2023, which is largely anticipated to continue in 2024 as well.

Also, the luxury homes segment experienced renewed interest from buyers in 2023. Moreover, the decision to invest in housing or real estate is driven largely by an individual’s preference, financial position, and life stage.

Consistency in investments: Systematic saving is one of the most crucial principles in personal finance. This introduces discipline in saving with regular amounts set aside for savings. While mostly alluding to the market-related funds, systematic investments in guaranteed return products have witnessed an upswing, too.

Today, depending on factors such as risk appetite, financial goals, and preferences, an investor can use a range of financial investment tools, such as recurring deposits (RDs), savings-linked insurance plans, mutual funds, etc.

Buy-now-pay-later (BNPL) and chalking out a budget: The current BNPL trend influences consumer spending and savings. The ease of small loan availability has introduced consumers to an experience of buying more things in the present rather than waiting to save for these.

The important aspect to consider is the amount of equated monthly installment (EMI) that an individual can easily shell out. This should be considered while planning for these purchases and deciding on a budget for expenses and savings.

The tech-led innovation in the lending space has given a push to several options. Peer-to-peer lending fin-tech products are gaining momentum while providing opportunities for both borrowers as well as individuals looking to make quick returns by lending money.

In 2023, the automation of finances has gained new ground, which aids in saving time and money. Immediate transfers to savings accounts aid in building discipline in savings and also payment of bills.

Another crucial emerging area has been the investment in sustainable investments that are committed to environmental, social, and governance (ESG) practices. These investment tools are gaining increasing popularity.