How will AI impact your personal finances?
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Artificial Intelligence technology is quickly becoming the biggest disruptor across all industries. ChatGPT brought AI to the mainstream. Rapid advancements in these chatbots have captured the attention of everyone from higher education to B2B technology companies to government regulators. We are still in the early stages of AI development and application, but how will it impact you? More specifically, how will AI impact your finances?
AI versus Online Search Engines
Think of a question. Now think of what you would type into a search engine to find your answer. With a search engine, you have one chance to find articles or information to answer your question. From there, you must search the recommended results to gather accurate data.
Now think of the same question, but imagine a conversation with someone who already knows every bit of information on the internet. Imagine the back-and-forth discussion, which includes follow-up questions to provide more detail and clarity. Imagine being able to assign tasks like answering your homework problem or writing an article, email, or code. This is the difference between search engines and a natural language processing tool driven by AI technology. It allows human-like conversations to find the answer and complete the task.
Predictions on How AI Will Impact Your Finances
Financial literacy will improve with immediate access to accurate and intuitive answers to our questions. This will decrease time and barriers when learning. Most people lose interest when searching for a subject matter, digging thru articles, or reading books. This advanced learning curve will be applied everywhere, from financial literacy in school to understanding complex IRS codes.
Regarding identity theft prevention, unusual spending alerts from your bank or credit card company will become more precise. AI-powered detection tools are already being used to prevent and detect fraud and identity theft. These continued advancements will help mitigate potential threats before they cause financial harm.
However, this same technology will also become a tool for the attackers. A.I. will increasingly become the backbone of cybersecurity for financial institutions.
Financial advisors often run a retirement analysis based on your current savings and projected spending in retirement. This predictive analysis generates a probability of financial success during retirement using a Monte Carlo analysis. The results of this analysis are only as accurate as the information put into the system. The ability to assess your current spending habits, along with the future costs of these habits in a certain region of the country during your retirement years, will become standard. No longer will you need to calculate living expenses to track your budget.
Authorizing your advisor to access this information will become seamless, allowing real-time adjustments to your retirement analysis and enhancing the accuracy of the results.
Your advisor will also use this real-time automatic tracking to help prevent the adaption of poor spending habits.
Banks will use this information to track spending and automatically alert people when they reach a specific spending level in their accounts. The information will also be used to expand their free budgeting tools for customers, which will help them with targeted marketing-based spending habits.
For vacations, soon, you will be able to use AI to plan an entire vacation, given a specific spending limit. The software will create your itinerary, book your restaurants, and navigate your days based on your daily budget. A.I. will become your personal travel agent.
Summary
The impact AI will have on your finances is limitless. We are still in the early stages of development and adoption. There are too many inaccuracies within the technology for widespread use, but AI is constantly being improved.
When it comes to AI, our fear of humans being replaced by technology within the workplace will only increase. As much as this is possible for certain job roles, we believe most workers will use AI as a powerful tool for improving the efficiency and accuracy of job functions. Moving forward as a society, we will likely all lean into AI as a useful tool.
However, even considering all the benefits, we should remain cautious of this powerful technology. As technology advances, so does the lack of privacy and unlimited data sharing for the financial gain of others.
Evan Bedel, CFP, is President at Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at www.BedelFinancial.com or email Evan at EvBedel@BedelFinancial.com.