Approximately 9 in 10 Americans are now using technology to manage their finances according to a new report by Plaid. This illustrates a 58 percent year-on-year increase from 2020. While the acceleration of technology in personal finance has been partially driven by the pandemic, the continued mass adoption of financial technology has also increased as many others realize the benefits of incorporating technology into their money management agendas. With increased ease of access, real-time information, and a host of new financial management features being introduced by apps, technology is not only helping consumers gain more control of their finances, but it is also helping them save more and even get ready to apply for a mortgage.
In This Article
Saving Automation Tackles The Issue Of Oversight
One of the greatest benefits of technological advancements in money management has been the introduction of automated payments. For businesses and consumers, the automated payment feature has meant they have a reduced chance of forgetting to pay outstanding bills or transferring additional money to their savings every month.
Financial apps like Acorn and Chime now round up money from purchases and allow users to automate a set amount to be transferred during the month or round up purchases (with the difference going to a dedicated savings fund). For instance, Chime’s Save When I Get Paid enables users to transfer 10 percent of their paycheck to savings automatically every payday. According to Chime, this feature has helped its members save over $400 million in 2018.
Automatic Enrollment And Saving Features Helping Americans Save More
This leads to another key point: consumers are having a better chance to save more. With round-up apps like Chime, users can build up an emergency fund without having to micro-manage or plan it. The automatic diversions of 10 percent of your monthly salary or rounding up of purchases can feed the growth of a savings cushion- or emergency fund. At a time when costs of living are soaring and only 23 percent of Americans have emergency funds, any help in this area is much needed and appreciated.
Technology is also helping Americans improve their financial preparation for their retirement. For instance, auto-enrollment in 401 plans has led to a significant increase in 401k participation, according to the Bureau of Statistics. This has meant that Americans can be more prepared for retirement and the costs that come with it.
Continuous Real-Time Information Means More Informed Financial Decisions
Budgeting and money management tools are real-time and available on the go. For users, this means you can gain a picture of your finances ay anytime and anywhere, including on the go. With more information on your spending habits, corrective financial actions, and adherence to budget, you are then able to adjust your spending habits to stay on track with your financial goals. For instance, the budgeting app You Need A Budget (YNAB) provides real-time alerts and updates on how well you are sticking to your preset budget throughout the month. Spotting bad spending patterns and developing spending habits gives you the choice to adjust your spending and save money or continue on the current financial path. In some ways, this can help you cleverly put more money away or make more informed investment decisions for money saved.
Get The Best Price Without The Hassle
Technological advances are also helping consumers stick to their budgets by ensuring they get the best prices without the hassle of looking around. With a simple search or the use of a price comparison app like QR Reader, Shop Savvy, and Flipp, you can save money on your purchases. The ability to get the best prices when spending money means you can have surplus cash which can be recycled into savings at the end of the month.
Opening The Door For Better Financial Inclusion
There is also another reason why some consumers are unable to save or manage their finances efficiently- the lack of financial inclusion and literacy. With the help of technology, the 2.5 billion consumers who are considered ‘underbanked’ now have better access to financial products including savings accounts, access to loans, and investments. Historically the lack of access to basic financial management tools has meant that more people were unable to make their payments and has their credit profile affected, possibly without their knowledge. This made it more difficult if they decided to apply for a loan or additionally finances, due to the negative impact missing payments can help on their credit profile.
Is technology making our daily lives easier? Yes, in more than one way. Not only is technology improving the efficiency and effectiveness of the workplace but it can also improve your personal financial efficiency and effectiveness. With continuous real-time financial information, greater financial inclusion, and automated savings, there is no question whether technology is improving money management for consumers today.