For many years, the norm when it comes to personal finance has been to track it manually. This previously meant keeping a tight eye on spending and using some guesswork along the way. However, in recent years, the rise of Artificial Intelligence (AI) has changed all of this. Now, technology is helping us transform how we manage our finances, make smarter decisions for our money, and even invest for a better future. From phone apps to major investment platform algorithms, AI is all around us. And, it has plenty of tools to offer that can help you make smarter financial decisions.
Automated budgeting and spending analysis
Tracking what you spend makes sense, but it can be monotonous. Now, thanks to financial apps powered by AI, this process can be automated. This tech helps you to seamlessly link credit cards and bank accounts to help organise spending in real-time. These apps, however, do a lot more than simply tallying your spending. Machine learning helps them to spot spending patterns. This means offering your personalised insights into your spending habits and flagging up unusual transactions. If, for example, AI notices a sudden increase in spending on a particular item, then it can send you a gentle reminder to help you stay on budget so you don’t go into debt.
Intelligent savings and investment automation
Saving and investing can be complex. However, AI solutions help to make it easier and more accessible. AI automated savings apps can look at your income and spending. They can incrementally move small sums into your savings accounts without it having an impact on you. Over time, even small amounts can really add up. Robo-advisors, or automated investment platforms, can help you to create an investment portfolio using AI algorithms. This can be tailored to any financial goals and attitudes to risk you may have.
Fraud detection and enhanced security
When it comes to financial security, AI has a unique ability to spot anomalies. In fact, credit card companies and banks already use AI to help identify suspicious activity in transactions. Your typical spending habits are something it uses to learn about you. Then, if your spending deviates from what it knows, a transaction is flagged as suspicious. This might be an unusually large purchase or one in a foreign country. Plus, when it triggers the alert for suspicious activity, your card can be blocked in seconds. This goes a long way to protect you from both identity theft and fraud.
Personalised financial advice and planning
AI can also offer you guidance on a personal level, as well as crunching numbers. Financial platforms that are AI driven can become something of a personal finance coach. They work by looking at all of your finances, from your savings to debt, investments to income. Then, they’ll give you some personalised recommendations. Some can show you real life scenarios to help you work out the best way to do things. This can include how to pay off credit card debt or even purchase your first property.
AI in lending and credit scoring
AI is not just involved in personal finance, it is also a part of the lending industry. Many lenders are now using AI to look at individuals’ creditworthiness, rather than just looking at the more traditional credit scores. This is useful for those with income streams that are non-traditional or those who don’t have much credit history. The potential for the future is that the right financial products can be much more accessible.
AI is not a tool of the future; it is here now and its applications in the financial sector are increasing all the time. When we adopt this technology it helps create a more reactive approach to money management decisions, building a brighter more prosperous future.