AI is taking over personal finance: Does this mean a brighter investment future for us?
Automate savings, get personalised advice, and discover investment possibilities with AI
Artificial intelligence (AI) is emerging as a transformative force in personal finance, revolutionising how you manage your money, save for the future, and invest intelligently. Take a look on how advanced algorithms powered by AI are enabling unprecedented levels of automation and customisation, making financial management more accessible and efficient than ever before.
Mohamed Hashad, chief market strategist of finance brokerage Noor Capital spoke about how we can use AI now for our personal finance
Apps use AI to analyse your transaction history and create personalised budget categories. They can alert you when you're approaching your spending limits or when unusual transactions occur. This proactive approach helps you stay on track and avoid overspending before it happens.
AI money management platforms leverage advanced algorithms and machine learning techniques to provide personalised financial insights and automate routine tasks. These platforms analyse spending patterns, identify opportunities for savings, and offer tailored recommendations to help users achieve their financial goals more efficiently.
Heres what you need to know about AI money management platforms
Automated savings makes your life easier
One of the standout features in AI-driven personal finance is the ability to automate savings through innovative techniques such as the round-up feature. Traditionally, saving money required discipline and manual effort, often prone to human error and inconsistency. However, with AI, this process becomes seamless and effortless.
The round-up feature exemplifies commitment to promoting financial discipline effortlessly. Each time you makes a purchase with a linked bank account, It will automatically round up the transaction to the chosen nearest amount. For instance, if you have the round-up feature set to rounding to the nearest dirhams, then a purchase of Dh14.75 would result in Dh15 being charged to the user’s account, with the additional AED 0.25 directed towards savings.
If you have it set up to the nearest 5 dirhams, then a purchase of Dh14.75 would result in Dh20 being charged to the user’s account, with the additional Dh5.25 directed towards savings.
Over time, these incremental savings accumulate, contributing to the user’s financial goals without requiring active management.
Hashad said that this feature could result in astonishing saving results, “This ‘set it and forget it’ approach to saving can lead to significant results over time. Many users report saving hundreds or even thousands of dollars without feeling the pinch in their daily budgets.”
AI algorithms will analyse your spending patterns and financial behaviours in real time, adjusting savings strategies accordingly. This personalised approach ensures that savings goals are met efficiently, adapting to changes in income and expenditure seamlessly.
Your personalised financial guide
Beyond savings automation, AI money management platforms offer you personalised financial guidance tailored to your goals and circumstances. These platforms leverage machine learning to analyse vast amounts of financial data, including income streams, spending habits, debt levels, and investment preferences.
By processing this data, AI can provide actionable insights and recommendations. For instance, algorithms can suggest optimised investment portfolios based on risk tolerance and return objectives, or identify opportunities for debt consolidation to lower interest payments. This personalised advice empowers you to make informed financial decisions, aligning your spending and saving behaviours with long-term financial goals.
Vijay Valecha, chief investment officer of global financial company Century Financial, raised a good point about transparency and trustworthiness when using AI for personal finance.
Trustworthiness is a critical concern when individuals use AI to manage their finances. Therefore, companies can enhance client protection and trust by implementing the following measures, transparency: AI systems should clearly explain their decision-making processes, including the inputs and logic behind savings recommendations
“Demonstrate consistent performance and reliability in managing savings, with historical data available for evaluation.
“Third-party validation, independent audits and reviews can further verify the trustworthiness of AI platforms.”
Valecha emphasises the importance of the need for balance between AI and raw human analytical skills. Excluding human emotion and the potential for error is not always what you need to reach your maximum level of financial achievements. You need human discernment and expertise to take the final call.
Future prospects and industry impact
As AI continues to evolve, the potential for money management platforms to innovate and expand their offerings remains promising. Future developments could include predictive analytics to forecast future expenses, enhanced integration with other financial products, and personalised investment advice tailored to individual risk profiles.
In addition to enhancing personal financial management, AI-driven platforms are also contributing to broader economic trends. By promoting savings and encouraging responsible spending habits, these platforms have the potential to bolster household financial stability and support sustainable economic growth.
Regulatory landscape and challenges
While AI money management platforms offer substantial benefits, they also face regulatory and operational challenges. Compliance with financial regulations, ensuring data privacy, and maintaining algorithmic transparency are critical considerations for such platforms. Collaborations with regulatory authorities and continuous dialogue with stakeholders are essential to navigating these challenges effectively.
Yes, using AI to enhance personal finance and savings is revolutionary, with minimum effort required, other than setting simple features on the app you are good to go. However, it is important to note that relying completely on artificial tools is not the most sustainable for your future.
Like anything, human interference and adequacy is crucial for optimal balanced results.
Faisal Al Monai, co-founder and chairman of blockchain technology company droppGroup commented on how to obtain optimal results.
While AI can manage money efficiently, understand complex financial concepts such as inflation and compounded interest, and offer tailored strategies for savings and retirement plans, it is important to approach AI as a complementary tool rather than a complete replacement for human judgement.
“The strength of AI lies in its ability to process data quickly and identify trends that might not be immediately apparent to human advisors. However, financial decisions often involve personal values, long-term goals, and market conditions that may require human intuition and experience.
“Trust in AI for personal money management depends on the robustness of the platform, its transparency in operations, and the quality of data it uses. Regular updates, continuous learning, and human oversight can enhance the reliability of AI systems, making them a valuable asset for personal finance management.”
Looking ahead, the evolution of AI technologies holds immense promise for further enhancing the capabilities of money management platforms, potentially revolutionising how individuals across the globe approach financial planning and wealth management. As these technologies continue to mature, their impact on financial inclusion, economic stability, and individual prosperity is likely to become increasingly profound.
As AI continues to evolve, its transformative impact on your personal finance is undeniable, promising a future where financial management is more accessible, efficient, and tailored to your needs than ever before.