Yes, I’m a Terminator fan, so every time my husband mentions AI or what AI is doing now…I go right into SKYNET mode! HA! I can’t help it. Hollywood has ingrained into us the idea that computers will get tired of us one day and take over. It seemed like such a far-fetched idea, but with recent developments in AI, it totally looks possible.
But, is AI all bad?
No. There are many great uses for AI, when used properly and respectfully. I’m all for streamlining processes to help save us time and energy or using AI to help with a research project. It can be extremely helpful in those areas. And there have been numerous examples of “new technology” in our past that have made people nervous at one time.
Take the calculator: parents were afraid that kids wouldn’t know how to add if they were dependent on calculators. Take the internet: I used to do my research for school papers from the Encyclopedia Britannica or the library (did I just date myself?) and now, with computers, 10x the information is right at my fingertips. Is it wrong to use a calculator or do research from the internet? Nope. But at one time, people were concerned about it.
It comes down to education and regulation. When we are not properly taught to use something or given boundaries on how to use it respectfully, it can be easily abused…whether the user is aware of it or not.
AI and Personal Finances
Let’s transition to personal finances! AI has BURST into our lives and we are all starry-eyed thinking how much easier our lives will be! I’ve met a few people who have told me that they have even used AI to create their monthly budgets. But then, what about Financial Literacy? Should we just toss that aside because now there’s an algorithm that will handle all of it for us? Let’s look at some of the PROS and CONS of using AI in personal finances:
Pros:
- It can analyze and categorize your expenses to reveal your spending habits (with training).
- Based on your financial goals and spending habits, it can help create a custom budget or spending plan for you.
- It can save you time by automating bill payments and savings transfers.
- Based on your spending, it can show you areas of concern or areas where you could be saving more.
- It can provide financial insights based on your habits.
Cons:
- You need to provide a lot of data for it to do all the PROS, so there is concern over data security and privacy.
- AI is not flawless and should be consistently checked for accuracy (so will it actually save you time?).
- Every financial situation is different, and AI does not have a human’s emotional intelligence, judgment, or critical thinking skills to look at the whole picture and then determine the best plan of action (decisions are based on more than just facts).
- Errors in the algorithm can lead to incorrect recommendations.
- The dependency on AI would lead to a lack of personal financial awareness.
My Takeaway…
AI is a pretty cool tool, but it’s only a tool. Period. It is not a replacement for human involvement. And when it comes to personal finances, I do think AI has a place, but I don’t think it should replace YOU as the driver. Would using it make budgeting less time consuming and give you some pretty interesting insights, I think so! So there’s a WIN there. But again, you should always be the one that is making the decisions and in control!
But what if you hate budgeting?
Many people have said to me that they hate budgeting. That it feels restrictive. That they have no life with a budget. So, when they see AI and all it can do, they get starry-eyed thinking that all their budgeting problems are finally over. Well. If you think budgeting right now is restrictive, just wait until a computer tells you how to do it.
They don’t know YOU and they don’t understand the financial emotions you deal with every day. And, like mentioned earlier, you’re going to have to consistently monitor it for accuracy. Overall, AI will only create a budget for you based on what it knows…black and white…no gray area. That, to me, sounds restrictive.
So what should you do?
Watch, observe, and make the best decision that gets you to your goals AND keeps you in control. AI is still in its baby stages and it has a long way to go. It’s definitely a cool tool and a lot of budgeting apps have already started to implement it in small ways.
- Should it replace you or your need to know basic financial literacy? No.
- Should it be investing for you? No.
- Should it be creating a budget for you? It could, but it might not be the best one for you.
- Should it be helping you automate payments or savings transfers? Sure.
- According to Nasdaq: Everyone wants to save, but like getting in shape, it can be a struggle. With technology, you can now set savings goals — a specific amount and timeframe — and automate the rest. AI can figure out how much of each paycheck needs to go into savings. Smart banking apps can monitor progress toward savings goals, and alert you when you’ve reached milestones.
Here’s one thing to do TODAY:
Before you start looking into all the ways AI can help you budget, create one…yourself! Get familiar with your financial goals, your spending habits, and how you want the budget to look and act. Get all these things moving BEFORE you introduce ANY AI into your personal finances. Doing this will keep you in control and your path steady. If you need help with these beginning steps, please reach out! That’s what I’m here for.
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