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The Future of Personal Finance Management: Leveraging AI and Automation

Managing your money can be challenging. You now have many critical financial choices that will affect your future. This includes setting a budget, saving up, investing for later, and planning for retirement. Messing up in one area could hurt you financially down the line. 

But the good news is that technology keeps improving, especially with AI and robots getting involved. These tools are changing how people deal with their money. 

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So, what will managing your money look like in the future? How can AI and automation help guide your financial decisions? If any of that sounds interesting to you, take a minute to read through this post. 

We will explore the future of personal finance management with AI at its core. 

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How did personal finance management evolve?

Back then, people had to do everything by hand—keeping track of expenses on spreadsheets, balancing checkbook balances, and moving money between savings and investment accounts. 

It worked, but it required much effort. Apart from that, the manual aspect of these processes also made them more prone to human errors. 

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Thankfully, things have become more convenient with digital banking applications. Now, you can check your mobile banking app to know your account balances and pay bills from your phone. There are plenty of budgeting apps, too. You can use those to track your spending and save up for different financial goals.

Later, people realized they needed even more powerful tools as more and more transactions went digital. All that data needed to be organized and analyzed in more innovative ways. That’s where artificial intelligence and automation came in. We began using technology to manage personal finances in new ways or ways beyond what we could do on our own.

How AI Changes People’s Financial Outlooks

AI will change how people handle their finances. It can look at tons of data and give us valuable real-time insights.  

One area it could help with is budgeting and tracking what you spend. AI tools can also automatically categorize your transactions, determine your spending patterns, and offer personalized tips to help optimize your budgets and save money. 

They could also spot unusual transactions and warn you about fraud or unauthorized charges, making you feel more secure.

AI transforms how people manage their money

Additionally, AI transforms how people invest their cash. Robo-advisors use algorithms to determine your risk level and goals. These robo-advisor platforms can keep an eye on what’s happening in the market to build you a customized portfolio. They offer low-cost, automated investment management, which makes investing more accessible to more people. 

Financial players showing support

Automation and AI will be here to stay as more financial players encourage using this technology. 

Personal finance platforms like SoFi also offer perks like a bank account bonus as part of their AI-driven financial management services. 

This new bank account bonus encourages people to try these AI tools to manage their money. First, getting a bonus is a solid reward for giving the technology a shot with budgeting and financial planning. 

Plus, the chance at a payout gets people interested in checking out what these AI budget apps can do. As they use them and see how easy it is to track spending and get valuable insights, they realize how helpful automation can be.

Also, the bonus removes any doubts people might have about how AI and robots handle their finances. By offering money just to test these new tools, banks like SoFi make it less risky to try the latest solutions. It helps more customers feel comfortable using AI for their money.

Tying the bonus to using AI budgeting apps gets individuals on board with automation for managing their finances. It rewards using tech solutions while empowering people to control their money more effectively and efficiently with AI’s help.

Ways You Can Use AI for Personal Finance Management

Handling your money is about watching your budget, putting some aside, investing it, and thinking about the future. AI can lend a hand with all those tasks.

Budgeting and expense tracking

AI tools can look at all your spending and determine where your money goes each month. They can even put each transaction into categories like groceries, utilities, recreation, retirement, and education.  

And here’s the convenient part: AI can help you watch your spending habits and stay on budget. If you say something like this: “I only want to spend $200 going out per month,” it will let you know as soon as you hit $201. 

That way, you can pull back before blowing past your limit. It helps you stay on top of where your money is going and find ways to save some cash. 

An exciting AI app that has this functionality is Cleo. It looks at your bills, income, and past spending to fully understand your budget and give tips. 

You can track your spending, plan for your monthly income, ask questions, save for things you want to buy, borrow cash if needed, and look at where you can improve your spending habits. 

Your data helps you understand where your money is going and coming from. What makes Cleo different is its chat feature. In the chat, the app will prompt you to spend or save more based on your financial habits. You can ask it to show your income, expenses, and budget. 

The chat is also where the magic happens. You can ask Cleo to either “hype” you up or “roast” you about your spending. 

This app will let you know how you’re doing with your money. It’ll give it to you straight—let you know what you’re doing well with and what habits you need to improve. It’s like having a friend who isn’t afraid to call you out on your bad money decisions. They’ll help you stay motivated to get your finances on track.

Investment management

Robo-advisors use algorithms and AI to curate personalized investment plans for people. They’ll consider what you’re saving for, how much risk you will take with your money, and when you might need to use the funds. 

The robots crunch all that information and build a custom portfolio tailored just for you. It shows how unique technology can handle all that data behind the scenes. 

Then, they automatically manage your investments to match your plan. The robots do all the work of picking investments and balancing your portfolio. It makes investing easy and means your money has the best chance of growing over time toward what you need it for. 

The technology behind those robo-advisors isn’t groundbreaking. Wealth managers have been using automated software to handle investment portfolios since the early 2000s. It’s not a new thing at all. 

But before Betterment and Wealthfront, only wealth managers could buy this technology. So, every day, investors had to hire a financial advisor if they wanted their money managed this way. 

Most robo-advisors use a simple investing approach based on modern portfolio theory. They’ll take your money and automatically spread it across mutual funds and ETFs to lower your risk. It’s all done with the click of a button. 

As a customer, you typically can’t pick the specific funds or stocks/bonds in your account. The robo-advisor handles all those investment choices for you.

Financial planning

Financial planning tools that use artificial intelligence make a plan for your money customized just for you. It looks at how much you earn each month, your expenses, what you’ve saved up already, and any debts you have. 

Then, it gives you ideas for saving money, investing in your future goals, and planning for retirement. The recommendations are tailored specifically to your situation and what you’re trying to achieve. 

Credit monitoring and management

There are also credit monitoring tools that use AI. They can keep an eye on your credit score for you. It’ll see what factors are helping or hurting your score and provide tips to boost it. Having something to help manage your credit this way is handy. 

The tools inform you if someone steals your identity or uses your information without permission. That way, you can stop the fraud before it causes big problems.

Retirement planning

These retirement planning tools use AI to determine where you’re now financially and estimate your retirement expenses. They crunch the numbers and figure out how much you need to save each month to hit your goals when you’re not working anymore. 

And it doesn’t stop there. These AI tools will give you tailored recommendations. They’ll suggest an amount you should contribute annually to your retirement savings. Not only that, but the tools will provide investment strategies to help the money you save grow over time.

Plus, AI and automation can make managing your money much more straightforward. You can leverage these technologies to make better financial choices and achieve your goals. AI can optimize your budget and maximize your savings and investments to squeeze out as much as possible for your golden years. It ultimately improves your overall financial well-being.

Automation in personal finance

Automation will help handle our finances going forward. Tasks like paying bills, shifting money to savings, and putting money into investments will all happen automatically. That’ll free up a lot of our time and brainpower. This fact means we can focus more on essential financial planning.

For example, automatic bill payment ensures bills get paid on time. You don’t need to stress about late fees or missing a payment. Just like automatic savings transfers can help you start an emergency fund or save for specific goals without moving money each month yourself. 

Automation can also optimize investment strategies. It will automatically rebalance our portfolios, take losses for tax purposes, and use dollar-cost averaging without us having to monitor things constantly. These automated processes help us get the best returns while reducing risk.

Image by micheile henderson on Unsplash 

The Future of Personal Finance Management

The future of managing personal finances looks promising. As artificial intelligence uses data smarter, advice and suggestions​​ will become more accurate and useful. 

Automation will also free up time. People can focus more on long-term planning and goals. With the right apps and tools, anyone can stay on top of their money and work towards their goals. 

And it’s all thanks to technology—AI and robotics are changing how people save and spend. Processes are getting automated, so managing your funds is more straightforward than it used to be. 

These technologies can automatically analyze data, give personalized tips, and do routine money tasks. While there are challenges, the potential benefits for personal finances are enormous.

James Musoba
James Musoba
Studying Africa's startup and technology scene. I always look forward to discovering new exciting inventions and vibrant entrepreneurs.

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