At one time in history, you’d likely only spend what you could see in your wallet. But the rise of modern technology makes it much easier to pay in different ways, often with just a tap of a card.
While technology has made the process of paying for something more convenient (no digging for change or writing a check!), it has also created a challenge when it comes to overspending. However, there are apps that can help you get ahead of saving for short-term and long-term goals, while other apps can become a safeguard to getting yourself into too much debt, notes Southwest Recovery Services, a full-service collection agency in Dallas, Texas.
There’s no doubting that technology has had a profound impact on personal finance and will continue to in the future. Here are some ways it has influenced how we save and spend.
More Reliance on Apps Than Advisors
While many people still turn to financial advisors to make investments and other transactions, technology is quickly replacing these roles with advanced algorithms.
This trend is apparent especially among the millennial generation, who are turning to apps on mobile devices to manage their finances. Meanwhile, millennials are also set to inherit a lot of money from their parents, but they will be more likely to trust an algorithm than a face-to-face advisor in many cases. One reason is that the younger generation values immediacy with financial information such as how their portfolio is performing and an app can provide that any time of day, explains Southwest Recovery Services.
The rise of the robo-advisor means your financial planning decisions may be more likely to be driven by artificial intelligence with little human input. These digital advisors can assess your goals and choose the best investment options on your behalf.
Platforms That Help You Save Money
In order to save money, you have to have a good idea of your spending habits, explains Southwest Recovery Services. However, short of creating spreadsheets on your own to track your purchases, technology can help you set aside money for the future and even suggest ways to cut down on expenses for things you need now.
In addition, some of these apps can help determine what you spend your money on the most to help you determine if it’s a problem area. By considering other factors such as monthly bills, the technology can predict how much you can add to your nest egg each month.
Meanwhile, many retail banks have devised features that automatically put aside a dollar amount or percentage of your income into your savings.
Other apps are designed to find the best deals on everyday items from stores you probably already shop at. This can make a surprising difference in how much more you have left in your bank account at month’s end, notes Southwest Recovery Services.
Determining Credit Scores
Missing credit card payments and defaulting on loans will have a negative impact on your credit score, which lending institutions use to determine if you’re a risk.
While there are already fairly in-depth formulas to assess your credit score, access to more data means that your smaller purchases may be factored in — which could potentially close the door to loans from big banks. However, more people are looking to private lenders.
While technology can actually influence you to spend more if you’re not careful, used properly it can be a valuable tool in managing your finances, says Southwest Recovery Services.
