5 Things We Learned In 2022 About Our Money

The new arrival in our household has meant that blog post ideas have been generated more than actual blog posts over the last few weeks. I’m not sure anything can completely fully prepare you for a new baby, but after an absolutely manic few weeks we are starting to find our rhythm.

2022 might have been brutal…but we learned a lot from it

2022 was a crazy year for investors! In retrospect, however, the past three years have been crazy. We like to think that this has been the best time to start investing as we have seen pandemic panic, stratospheric increases in stock prices, meme-stock shenanigans and the plunging values of markets last year. All this in three years! If you started investing and you’re still not spooked…surely that’s a good sign that you’re dialled in and ready to stay the course?

We thought about what we learned from this year and came up with 5 things.

1. The power of FU money to give you options
2022 was the first time we really realised that we were buying ourselves options by pursuing FIRE. We really wanted for S&C Jnr. to be able to have a parent at home for at least his first year. In the end we asked for 18 months of maternity leave…which was then granted! On top of that, Shortbread’s school even promised to keep her position of responsibility open for when she returned. All of this is wonderful and great, but we were preparing for her to quit if the 18 months wasn’t granted. A few years ago, this just wouldn’t have been an option, but our investments and savings have given us several years of living expenses at this point. Through pursuing FIRE we also track our expenses and budget for things (more on that below). This means that we realised it was absolutely feasible to live on just one of our salaries for a little while.
Additionally, as explained in our Q4 2022 update, additional expenses we hadn’t planned for didn’t really impact our stress levels around the birth. This is really the crux of this realisation – FIRE is not necessarily about giving your employer the middle finger, it’s about giving yourself options. The power to be able to say FU if you need to makes you bolder. It makes you ask for more to see what you’ll get. It removes so much of the fear and stress surrounding big life changes. We really saw this for the first time in 2022.

2. Net worth can fluctuate a lot…but we’re staying the course.
Whoa boy, this year was volatile in the net worth department. You can see in the net worth update posts just how much ours bounced about. In some ways this was great for us neophyte investors having only gotten our feet wet over the last few years. So much of personal finance is geared around the management of your emotions during volatile times. It’s stated time and time again about the importance of not deviating from the plan. We found that, while it hurt when our portfolio dropped, we were going nowhere. In some ways we really wondered if there was anywhere to go in the first place – what asset class did well in 2022? In the face of this volatility, we doubled down and ensured we were maximising our investing through every pay period. Nothing distracted us. It got to the point that when markets began to rise it still felt pretty gutting as the sale was drawing to a close! We learned this year that we were in it for the long term. We are going to stay the course.

3. Tracking expenses is a superpower
We made so much use of our tracking software Firefly III. By December we were absolutely clear on what was a realistic monthly budget for savings etc. Doing this was arduous, even if it was a 1 minute entry using our phones. Frankly we don’t understand how anyone has the discipline to do this in excel or by hand at the end of every day. This certainly wouldn’t work for us! Now we have nearly two years of data we can see where we are spending money and, for the most part, we are pretty happy with it. We don’t really budget in the traditional sense using categories etc, but tracking has given us an insight into our spending that has allowed a level of intentionality that we didn’t have before we started doing it.

4. Quarterly budget meetings are awesome
Further to tracking expenses, having a quarterly money meeting has been brilliant for our relationship and our ability to anticipate expenses in advance. We celebrate our quarterly dividends with a cappuccino (made at home) and some cheap cake slices from the local bakery. It’s a little tradition that we now really look forward to. We are then able to reflect on the quarter just passed and set targets for the next. Our net worth updates are written as a result of these. We’ve discussed things like how much we are comfortable with as a cash reserve and the creation of various funds for things like buying a new iPhone or hospital bills for the birth of S&C Jnr. We recommend all couples check in with each other like this!

5. Treat yourself (especially when you hit milestones!)
While it is a thrill to see your net worth increase (well it is for us anyway…), the actual pursuit of FIRE can be a little dull. It’s just numbers on a screen! We may be in the “boring middle” now, so game-ifying things keeps a sense of achievement. Obviously, a part of FIRE should really be about addressing the things in your life that make you most happy and intentionally choosing how you spend your money. For us this means ensuring our lives don’t become cluttered and we don’t bury ourselves in the things we own. We want to reject consumerism a bit. Pursuing FIRE and intentionality doesn’t necessarily feel like a deprivation to us, but the added issues of living in a different country can make things a bit more challenging. These challenges can often feel like they grind you down and it’s really hard to not fall into the trap of thinking that just throwing lots of money at them can fix them faster or with less effort. In this case pursuing FIRE can edge up towards feeling like a deprivation more than it would if we were living back home. Thus, we have found it extra important to celebrate the milestones we reach on our journey. Treats don’t need to be expensive either – simply doing something together and discussing our progress over cake or a bottle of fizz can be treating ourselves. We learned this year that marking the journey with successes makes us feel more motivated and moves us closer to the intentional lives we aspire to live.

What were the lessons of 2022 for you?