The year in personal finance has not been a pretty picture. Among the lowlights were a slowing economy, inflation, persistently high borrowing costs and more people having trouble paying what they owe. But alongside these troubling developments are some trends that offer some encouragement about not only 2024, but beyond. Here are a dozen things going right in personal finance just now:

Unemployment is low

The unemployment rate in Canada averaged 7.6 per cent from 1966 to 2023 and was as high as 13.7 per cent in the pandemic, according to Trading Economics. The jobless rate increased to 5.8 per cent as of November from 5 per cent earlier in the year, but it still looks good on a historical basis and offers a testament to the economy’s resilience.

Conservative investors, including seniors, can still get a decent return on safe money

Rates on guaranteed investment certificates, favoured by people who emphasize safety above all, remain in the 5-per-cent zone as the year winds down. There is still an opportunity to produce inflation-beating, zero-risk returns over the next five years.

The war on inflation is just about over

The year-over-year inflation rate fell to 3.1 per cent in October from 5.9 per cent in January, which means we are closing in slowly on the Bank of Canada’s preferred level around 2 per cent. It’s expected the bank will acknowledge this by lowering interest rates in the first half of 2024.

The pain of variable-rate mortgage holders will ease

The borrowing cost for variable-rate mortgages is pegged to the prime rate at major lenders, which jumped to the current 7.2 per cent from 2.45 per cent in 2020-21. Lower rates in 2024 would start the long process of undoing some of the damage caused by this rate surge.

CPP recipients get a nice bump in 2024

Canada Pension Plan benefits will rise by 4.4 per cent next year over 2023 levels. If you get the CPP, your benefits will beat inflation.

The boring old balanced portfolio is crushing it

Portfolios with the traditional balanced mix of 60 per cent stocks and 40 per cent bonds had an alarmingly rotten time of it in 2022, but returns for the year through Nov. 30 were in the 9-per-cent range. Bonds are recovering from a multiyear slump, and stocks keep on pushing higher.

The TFSA limit is going up for the second straight year

Tax contribution limit for TFSAs will be $7,000 next year, up from $6,500 in 2023 and $6,000 in 2022. Many people can’t put that much in their TFSAs today, but that’s okay. This room will be waiting for them when better times come.

FHSAs are widely available

The first home savings account made its debut in April, but the vast majority of investment industry players weren’t ready to offer it to clients. As 2023 ends, FHSAs are finally available widely. Set one up if you have even the slimmest hope of home ownership. You can put $8,000 a year into an FHSA, to a maximum of $40,000.

$10-a-day childcare is rolling out

The federal government has committed to providing $10-a-day childcare by 2026. The program has been criticized for progressing too slowly, but parents in some parts of the country are already starting to get some relief from a massive monthly expenses.

More money-saving payment options for travelling

The rise of prepaid cards from the likes of EQ Bank, Koho, Wealthsimple and Wise allow travellers to pay for purchases while outside the country and avoid the 2.5-per-cent foreign currency conversion fee that applies to the vast majority of credit cards.

Wages are going up by close to 5 per cent

Average hourly wages have consistently risen at a pace around 5 per cent on a year-over-year basis in 2023, which beats inflation cleanly. The Bank of Canada wants lower wage gains to help cool inflation, but for now workers have the upper hand.

The household savings rate is strong

The savings rate in the third quarter of the year was 5.1 per cent, which compares well to what we saw in the prepandemic world. Money in savings could limit the damage if the economy badly stalls next year.

The Globe and Mail, December 19, 2023