AI and Your Money

By Susan Gonzales on 12/13/2024 @ 05:14 AM

AI and Your Money

You may already know that AI is being used behind the scenes in almost every aspect of our money. AI tracks user behavior to detect suspicious activities or unauthorized access. AI notifies us about overspending, upcoming bills, or unusual account activity. AI tools provide insights into credit scores and suggest ways to improve them. AI evaluates creditworthiness faster and more accurately by analyzing alternative data sources.

These are all great tools but like everything with AI - there are some good and not so good things about how it works. In this case, beware of AI and applying for a loan for a house, car, personal items or anything! The AI behind loan applications has been known to get it wrong because the algorithm (the instructions) have been written too narrowly and can discriminate.

For example, AI tools track when we make a mistake and correct it on our loan application. It identifies our shopping patterns, bill payment history, zip code and more. As you can imagine, a person is more likely to make mistakes applying for a loan on a device. What about someone who is impaired? AI can discriminate on a loan application based on zip code. It will know if the zip code is from a higher or lower-income area.

Beware of the “Click here and get approved for a loan in minutes!!” ads online. These could be fake sources or financial institutions with high interest rates to take advantage of people or they could have a bad reputation in loan management. Most importantly, do your homework and only seek financial loans from reputable financial institutions. Embrace AI literacy - understanding how the basics work.

Your money matters!

1. Budgeting and Expense Tracking

Personal Finance Apps: Apps like Mint or YNAB use AI to categorize transactions, analyze spending patterns, and recommend budget adjustments.
Automated Alerts: Notify users about overspending, upcoming bills, or unusual account activity.

2. Investment Management

Robo-Advisors: Platforms like Betterment or Wealthfront use AI to create and manage diversified investment portfolios based on risk tolerance and financial goals.
Algorithmic Trading: AI-driven algorithms execute trades based on market data and trends, optimizing returns.
Market Predictions: AI analyzes news, social media, and financial reports to predict market movements.

3. Fraud Detection

Real-Time Monitoring: AI systems flag unusual transactions, helping prevent fraud or identity theft.
Behavior Analysis: Tracks user behavior to detect suspicious activities or unauthorized access.

4. Credit and Loan Management

Credit Score Monitoring: AI tools provide insights into credit scores and suggest ways to improve them.
Loan Approvals: AI evaluates creditworthiness faster and more accurately by analyzing alternative data sources.
Debt Management: Offers strategies to pay off debt efficiently by simulating repayment plans.

5. Personalized Financial Advice

Chatbots and Virtual Assistants: AI-powered assistants like Erica (Bank of America) or Cleo answer financial queries and provide tailored advice.
Goal Tracking: Helps set and achieve savings goals by recommending actionable steps.

6. Tax Optimization

Tax Filing Tools: Tools like TurboTax use AI to identify deductions, reduce errors, and simplify tax filing.
Audit Predictions: AI evaluates the likelihood of a tax audit and offers preemptive solutions.

7. Savings Optimization

Automated Savings: Apps like Digit analyze income and spending habits to transfer small amounts into savings without impacting cash flow.
Interest Rate Comparisons: AI recommends the best savings accounts or investment options for higher returns.

8. Business Financial Management

Cash Flow Forecasting: AI predicts future cash flow for businesses, helping them plan better.
Invoice Management: Automates invoicing and payment reminders to ensure timely payments.
Expense Reconciliation: Streamlines tracking and categorizing business expenses.