5 Ways Fintech Improves Your Personal Finances
Your personal finances may not be an exciting part of adulthood, but it’s a top priority to ensure a comfortable lifestyle. And as the world continues to change for the worse with expert economists sounding the alarm on the likelihood of a recession in 2023, the need for better financial management has become even more critical.
This is where technology in the form of fintech can help save the day. In this article, you’ll learn more about the basics of fintech and how it can help you improve and manage your personal finances.
Fintech: What Is It Exactly?
Short for financial technology, fintech refers to any technology that improves, automates, streamlines, or optimizes the use and delivery of financial services. Fintech refers to algorithms, software, and applications for both mobile and desktop.
At its core, fintech is used by consumers and businesses alike to better manage their financial lives, processes, and operations.
How Fintech Helps You Improve And Manage Your Personal Finances
1. It Boosts Your Financial Literacy
In general, a person who acquires a better understanding of finances early in life has more time to build a better credit rating and can take more risks and improve their overall financial life. Decades ago, achieving good financial literacy was often difficult. Today, fintech has emerged as a new tool to encourage and drive financial literacy.
Fintech companies have come up with a variety of methods to educate their users. You’ll find apps that educate you about personal finance in the form of video lessons, financial courses, and various learning materials. Apps are also useful in teaching you how to form good financial habits, including financial mapping, and providing a complete picture of your finances.
2. It Makes Banking Easier
Gone are the days when you need to go to the bank to deposit savings and check your balance. Inconveniences like these and limited access to banking institutions are what obstruct most people from starting to take control of their finances.
However, thanks to fintech, it’s now easier and more convenient for customers to access banking services. Most financial institutions now offer online banking in several forms including website platforms and apps. You can now check your balance, pay bills, transfer money, and more with just a few taps on your phone.
Aside from its convenience, quicker and more intuitive transactions allow you to track your spending more efficiently. Digital banking apps and financial tools allow you to see transactions and financial history, so you can make financial adjustments as necessary.
3. It Provides New Financial Opportunities
Fintech has opened the door to new opportunities on how to make and use money that didn’t exist before—from better savings to new investment venues.
For instance, neo-banks and digital banks are currently on the rise to help improve saving habits. These fintech alternatives to traditional banking institutions are offering higher interest since they don’t face the same expenses as conventional brick-and-mortar banks. These online banks can offer up to 3% or higher interest rates on savings accounts, along with awesome perks and benefits.
Meanwhile, cryptocurrency is another great fintech innovation that offers quicker, more secure, and cheaper international payments. It removes currency conversions, eliminates high transfer fees, and completes the process faster as well as serving as a good investment product.
4. It Automates Your Finances
Behavioral economists advise that in terms of improving your personal finances, you need to start saving for the long term. And to save more money, you need to make it as simple as possible and remove any obstruction. This is where fintech comes in.
Fintech helps automate your savings. You’ll find solutions that allow you to deposit your paycheck straight into your savings account. Some tools also use emerging technologies such as artificial intelligence (AI) to move funds from your checking account to your savings account when its algorithms decide to do so by carefully scanning your income and spending patterns.
In addition to automating your savings, fintech can also automate your payments and spending. For instance, most banking apps allow you to set repetitive transactions for paying your bills, loans, and other expenses on autopilot. This helps prevent you from forgetting your due date and hurting your credit.
5. It Minimizes Financial Mistakes
With improved financial literacy, you can effectively minimize financial mistakes. That said, to further lower your risk of making mistakes, fintech utilizes technologies such as AI to do the math for you—whether in terms of investment opportunities, day-to-day banking, or loan payments.
Not only that, but most technology also sends you alerts for overdrawn accounts, payment reminders, and suspicious activity to keep you informed and reduce the risk of financial errors.
Takeaway
As you can see, fintech can contribute to good financial management. It helps save you time, money, and stress, helping you practice good financial habits and make well-informed decisions about your personal finances. Ultimately, fintech can help you take control of your finances, allowing you to enjoy a more stable financial life.
