[Alt Text: Eric Blue, CEO of Nevly, provides access to resources so that others can avoid getting trapped in debt and other common mistakes early on in their financial journey.
We have written extensively about the benefits of using artificial intelligence in the financial sector. Most of our discussions have centered around the use of AI in major financial institutions such as insurance companies, hedge fund management firms and financial advisory groups. This is a major topic of discussion, since the value of the AI in fintech market is estimated to be worth $39 billion .
However, AI technology can also be very beneficial for people trying to improve their personal financial health. You should be aware of the different financial mistakes that people make the most and find ways to use AI to help avoid them.
Use AI to Help Avoid Common Financial Mistakes
Embarking on your financial journey can be exciting and full of potential, but it’s not without its pitfalls. It’s crucial to be aware of the common financial mistakes people make early on and learn how to avoid them. Eric Blue, the founder of Nevly, a financial technology company, has shared his insights on the top 10 financial mistakes to avoid in order to achieve a successful and stress-free financial future.
As you begin your financial journey, it’s essential to approach it with a sense of self-awareness and responsibility. Understanding the impact of your financial decisions and being proactive about managing your money can make all the difference in the long run. Once you appreciate the common mistakes people make with personal financial decisions, you will realize the importance of using artificial intelligence to make better decisions.
Managing personal finances is becoming more complex with various investment options, debt strategies, and budgeting tools. AI is now used to assist people in improving their financial literacy and managing their finances better.
This article explores the benefits and limitations of AI in personal finance management and highlights tools and solutions for achieving financial goals. Personal finance management involves tracking income, expenses, and investments.
AI can aid in budgeting, debt management, and retirement planning. Successful personal finance management requires discipline and a deep understanding of financial concepts.
Eric Blue’s experience in the world of finance has given him a unique perspective on the challenges people face and the strategies they can employ to overcome these obstacles. By learning from the experiences of others, you can better navigate your own financial path and lay the groundwork for a stable and prosperous future.
Another crucial aspect of a successful financial journey is having access to the right tools and resources. Nevly, under Eric Blue’s leadership, aims to provide individuals with the tools they need to take control of their financial lives. With a focus on innovation and user-centric design, Nevly’s financial products, such as the ARLO app and Nevly Money, are designed to make managing your finances more accessible, efficient, and enjoyable. By leveraging these resources, you can optimize your financial plan and stay on track toward achieving your goals.
Finally, it’s important to recognize that everyone’s financial journey is unique. What works for one person might not be the best approach for someone else, and your financial priorities will change as you progress through different stages of life.
Eric Blue’s insights on avoiding common financial mistakes early on can help you build a strong foundation for your financial future, but it’s essential to reassess your plan and make adjustments as needed continuously. You can do this better if you take advantage of the right AI tools. By staying adaptable and committed to your economic well-being, you can confidently navigate the twists and turns of your financial journey and ultimately achieve lasting success.
Here are ten of the biggest mistakes that can be corrected with artificial intelligence.
1. Failing to create a budget
One of the most common mistakes people make is not creating a budget. According to a 2019 survey by Debt.com, 33% of Americans don’t maintain a budget, but since the pandemic, that number has decreased.
A budget is the foundation of any sound financial plan, as it helps you understand where your money is going and identify areas where you can save or adjust spending. To avoid this mistake, create a monthly budget that accounts for all your income and expenses, and track your spending to ensure you’re sticking to your plan.
Creating a budget not only helps you manage your money more effectively but it also encourages the development of healthy financial habits. By consistently monitoring your income and expenses, you’ll become more mindful of your spending choices and better equipped to make informed decisions. Furthermore, a well-maintained budget can help you identify and address any financial issues before they escalate, allowing you to adjust and maintain control over your financial well-being.
Technology has made the process of budgeting even more convenient and user-friendly, with various budgeting apps and tools available to help you stay organized and on track. Utilizing these resources can simplify the budgeting process, making it easier to maintain and update your financial plan regularly.
By committing to the practice of budgeting, you’re taking an essential step toward financial success and building a solid foundation for a prosperous future. Remember, a well-structured budget is more than just a way to manage your money; it’s a powerful tool for achieving your financial goals and aspirations.
There are a number of personal financial tools that use AI technology to improve the budgeting process. Cleo, Eva Money and MintZip are three of the best tools that help consumers use AI technology to make better budgets.
These tools use a variety of AI algorithms to help families set realistic expectations when it comes to budgeting for major expenses. These algorithms are able to account for inflation, changes caused by cost of living differences after moving and other variables. The machine learning algorithms provide much more nuanced financial insights and most people could ever make on their own.
2. Not establishing an emergency fund
An emergency fund is a financial safety net that can help you cover unexpected expenses, such as car repairs, medical bills, or job loss, without resorting to high-interest debt. Unfortunately, a 2023 Bankrate survey found that 36% of Americans have more credit card debt than emergency savings. To avoid this mistake, Eric Blue and other finance experts say to aim to save at least three to six months’ worth of living expenses in a separate, easily accessible savings account.
Establishing an emergency fund not only provides you with financial security during unforeseen circumstances but also contributes to your overall peace of mind. Knowing that you have a safety net in place can alleviate stress and enable you to focus on other aspects of your financial journey, such as paying off debt, investing, or saving for long-term goals.
Moreover, having an emergency fund in place can help you avoid the trap of relying on credit cards or loans to cover unexpected expenses, which can lead to a vicious cycle of debt. By prioritizing creating and maintaining an emergency fund, you’re investing in your financial stability and taking a proactive step toward ensuring your long-term financial success.
Again, AI-driven budgeting tools help people better prepare for these kinds of emergencies. They Use predictive analytics technology to better anticipate possible emergencies and the expected costs associated with them. This helps people make more informed financial planning decisions then they could make simply relying on general rules like saving three months worth of income.
3. Overusing credit cards
[Alt Text: Eric Blue advises consumers to avoid overusing credit cards early on in their financial journey, as it is one of the common financial pitfalls of many Americans.]
Bank cards generally is a useful monetary instrument when used responsibly, however they’ll additionally result in a cycle of debt if not managed correctly. In response to the Federal Reserve’s newest quarterly report on family debt and credit score, complete family debt rose by $148 billion, or 0.9 %, to $17.05 trillion within the first quarter of 2023. To keep away from this error, solely use bank cards for deliberate purchases, and at all times repay your steadiness in full every month to keep away from curiosity prices.
Bank cards provide varied advantages, comparable to constructing credit score historical past, incomes rewards, and offering a handy cost technique for on a regular basis transactions. Nevertheless, it’s important to make use of them correctly to keep away from falling into the entice of accumulating high-interest debt. Through the use of bank cards for deliberate purchases and budgeting appropriately, you possibly can benefit from these advantages with out compromising your monetary well being.
Paying off your bank card steadiness in full every month is an important behavior to develop, because it not solely saves you from paying curiosity prices but additionally helps preserve and enhance your credit score rating. A decrease credit score utilization ratio can positively affect your credit score rating, making it simpler so that you can qualify for loans and safe favorable rates of interest sooner or later.
Lastly, it’s important to be selective when selecting a bank card that aligns along with your monetary objectives and spending habits. Fastidiously think about components comparable to rates of interest, charges, and rewards applications earlier than committing to a selected card. By being strategic along with your bank card utilization and diligently managing your funds, you possibly can efficiently leverage bank cards as a useful monetary instrument whereas avoiding the pitfalls of debt.
AI know-how may also assist individuals get out of bank card debt. NewsWeek has an article titled Learn how to repay Credit score Card Debt Quicker Utilizing Synthetic Intelligence that gives an outline of some AI-driven apps that may assist shoppers making an attempt to get out of bank card debt.
One of many AI instruments that the article talks about known as Tally. NewsWeek writes that “Tally makes use of it’s computing energy to research APRs, bank card balances to supply a tentative debt-free date, offered that you just make the indicated month-to-month funds.”
Additionally, you will wish to use AI to assist select the correct bank cards. We have an article on this matter. This may also help you keep away from utilizing a card that’s more likely to get you into debt attributable to excessive rates of interest or onerous late charges.
4. Ignoring your credit score rating
Your credit score rating performs a vital position in your monetary life, because it impacts your capacity to acquire loans, bank cards, and even housing. But, a 2020 Shopper Federation of America survey discovered that solely 57% of respondents knew their credit score rating. To keep away from this error, Eric Blue suggests you recurrently monitor your credit score rating and take steps to enhance it, comparable to paying payments on time and holding your credit score utilization low.
Staying knowledgeable about your credit score rating is a vital side of economic literacy, because it means that you can perceive your present credit score standing higher and determine areas for enchancment. A number of free on-line companies provide entry to your credit score rating, making it straightforward to watch any adjustments or discrepancies. By holding a detailed eye in your credit score rating, you possibly can proactively deal with any points that may come up and preserve a wholesome credit score profile.
Enhancing your credit score rating entails a mixture of accountable monetary habits and sound credit score administration methods. Persistently paying your payments on time, sustaining a low credit score utilization ratio, and avoiding extreme functions for brand new credit score are all efficient methods to spice up your credit score rating; Newly’s ARLO app may also help you do that and extra.
Moreover, making certain that your credit score report is correct by recurrently reviewing it and disputing any errors can additional contribute to a robust credit score profile. By taking these steps and staying dedicated to nurturing your credit score rating, you’ll be higher positioned to benefit from monetary alternatives and safe a brighter monetary future.
AI know-how may also assist individuals which might be making an attempt to enhance their credit score scores. Numerous private monetary apps like Mint and Credit score Sesame have a wide range of synthetic intelligence algorithms that assist individuals make a lot of higher monetary choices.
These algorithms can do lots to assist individuals making an attempt to get out of debt, which is without doubt one of the causes individuals have poor credit score scores. They’ll additionally assist individuals higher monitor cost deadlines to allow them to keep away from hurting their credit score rating by making missed funds.
5. Failing to avoid wasting for retirement
Saving for retirement is crucial for securing your monetary future, however many individuals neglect this side of their monetary plan. A 2020 survey by the Transamerica Heart for Retirement Research revealed that 45% of American employees haven’t any retirement financial savings. To keep away from this error, begin saving for retirement as early as potential and benefit from employer-sponsored retirement plans and tax-advantaged accounts, comparable to a 401(okay) or IRA.
Beginning to save for retirement early in your profession means that you can maximize the facility of compounding curiosity, which might considerably improve your retirement financial savings over time. Even modest contributions to your retirement account can add up and develop exponentially because the years go by.
By collaborating in employer-sponsored retirement plans, it’s also possible to profit from employer matching contributions, which primarily equates to free cash in direction of your retirement financial savings. Using tax-advantaged accounts like a 401(okay) or IRA can additional optimize your retirement financial savings technique by offering tax advantages that encourage long-term saving. By making retirement financial savings a precedence and leveraging the accessible instruments and assets, you’ll be nicely in your technique to securing a snug and financially secure retirement.
There are numerous ways in which synthetic intelligence may also help you higher put together for retirement. AI know-how can use predictive analytics algorithms to anticipate future monetary wants.
A few of these instruments use very superior algorithms that account for a wide range of completely different variables, together with anticipated life expectancy based mostly on well being situations, price of dwelling in your space and anticipated life-style after retiring.
6. Not having monetary objectives
With out clear monetary objectives, it’s tough to remain motivated and targeted in your monetary journey. A 2018 research by Charles Schwab discovered that people with a written monetary plan had been extra more likely to save, make investments, and really feel assured about their monetary future. To keep away from this error, set short-term and long-term monetary objectives, comparable to paying off debt, saving for a down cost on a house, or funding your youngster’s schooling, and create a plan to attain them.
Setting clear monetary objectives is a important part of any profitable monetary plan, because it supplies path and a way of goal. By establishing each short-term and long-term targets, you possibly can create a roadmap that guides your monetary choices and helps you keep targeted in your priorities. This, in flip, allows you to allocate your assets extra successfully and make progress in direction of your objectives at a gentle tempo.
Eric Blue is aware of the significance of this step in growing a safe monetary future, that’s why he developed his enterprise, Nevly, to assist others obtain profitable monetary planning. Growing a plan to attain your monetary objectives entails breaking them down into actionable steps and figuring out the mandatory methods and instruments to achieve them.
By creating an in depth plan, you’re extra more likely to keep on monitor and preserve the self-discipline required to observe via along with your monetary commitments. This sense of group and construction can considerably contribute to your general monetary success.
Monitoring and adjusting your monetary objectives as wanted is equally essential, as your circumstances and priorities might change over time. Frequently reviewing your progress and updating your plan accordingly ensures that your objectives stay related and attainable. By setting clear monetary objectives and diligently working in direction of them, you possibly can domesticate a way of accomplishment and confidence in your monetary future.
7. Taking over an excessive amount of debt
Debt can shortly spiral uncontrolled if not managed fastidiously. In response to the Federal Reserve, in a fourth-quarter report of 2022, the entire U.S. family debt was $16.90 trillion. To keep away from this error, Eric Blue encourages shoppers solely to tackle debt for important purchases, comparable to a house or schooling, and prioritize paying in your loans as shortly as potential. Moreover, keep away from high-interest debt, comparable to payday loans or bank card debt, which could be tough to repay and may negatively affect your monetary well being.
Eric Blue, the founding father of Nevly, emphasizes the significance of being conscious when taking up debt and making knowledgeable choices concerning the forms of debt you’re keen to incur. By specializing in important purchases and avoiding high-interest debt, you possibly can reduce the potential burden in your monetary well being and preserve a extra sustainable debt-to-income ratio. Eric Blue’s recommendation on managing debt responsibly may also help you higher navigate your monetary journey and keep away from the pitfalls hindering your progress.
Making a strategic debt reimbursement plan is one other key part in managing debt successfully. Prioritize paying off high-interest debt first, as this may prevent cash in the long term and aid you change into debt-free extra shortly. Think about implementing debt reimbursement methods, such because the debt snowball or debt avalanche strategies, to streamline the method and keep motivated.
By following Eric Blue’s steering and utilizing assets like Nevly Cash and the ARLO app, taking a proactive strategy to debt administration, you possibly can obtain larger monetary stability and work in direction of a debt-free future with confidence.
That is one other space the place AI may also help you make higher monetary choices. You need to use a wide range of AI apps that may suggest sure monetary objectives that you could be not have in any other case thought-about.
8. Neglecting to take a position
Investing is a strong instrument for rising your wealth over time, however many individuals draw back from it attributable to a lack of information or worry of danger. In response to a 2020 Gallup ballot, solely 55% of People reported proudly owning shares. To keep away from this error, educate your self about investing fundamentals and think about working with a monetary advisor or utilizing the ARLO app that can assist you construct a diversified funding portfolio that aligns along with your objectives and danger tolerance.
Eric Blue, the founding father of Nevly, acknowledges the significance of investing as a method of securing long-term monetary development and stability. He encourages people to beat their apprehensions and acquire a strong understanding of investing fundamentals. By doing so, you’ll be higher outfitted to make knowledgeable choices that may contribute to your general monetary well-being. Eric Blue’s insights on the worth of investing emphasize the necessity for people to embrace this important side of non-public finance and leverage its potential for wealth creation.
For many who might really feel overwhelmed or unsure about the place to start, working with a monetary advisor or using a robo-advisor could be a wonderful start line. These professionals and platforms can present customized steering and aid you develop a diversified funding portfolio tailor-made to your monetary objectives and danger tolerance. With the experience of a monetary advisor or the comfort of a robo-advisor, you possibly can profit from skilled insights and assist as you embark in your investing journey.
Eric Blue’s emphasis on the significance of investing serves as a reminder that taking calculated dangers and diversifying your monetary portfolio can result in important long-term advantages. By educating your self, searching for skilled steering, and being proactive in your funding technique, you possibly can work in direction of reaching your monetary objectives and setting your self up for a safe and affluent future.
After all, It is very important just be sure you put money into the correct belongings. Some Individuals make the error of investing in belongings which have plenty of glamor connected to them, despite the fact that they aren’t more likely to be worthwhile long run.
AI know-how could be very useful for those who wish to make higher investing choices. These instruments can conduct the very best valuation calculations to find out The long run profitability of assorted belongings.
9. Not having insurance coverage
Insurance coverage is crucial for shielding your monetary well-being within the occasion of sudden occasions, comparable to accidents, sickness, or pure disasters. Nevertheless, a 2021 Policygenius survey discovered that 33% of People don’t have life insurance coverage, and 16% don’t have medical insurance. To keep away from this error, guarantee you will have ample insurance coverage protection on your wants, together with well being, life, incapacity, and property insurance coverage.
Eric Blue underscores the importance of insurance coverage as a important part of a complete monetary plan. He stresses the significance of safeguarding your monetary well-being and that of your family members by acquiring ample insurance coverage protection in varied areas, comparable to well being, life, incapacity, and property insurance coverage. By following Eric Blue’s recommendation and proactively securing acceptable insurance coverage insurance policies, you possibly can successfully mitigate potential dangers, navigate unexpected occasions extra effectively, and preserve monetary stability for your self and your loved ones.
AI may also aid you anticipate potential issues that you could be want to make use of insurance coverage to stop. This may also help you select the very best insurance coverage plan to cowl sudden issues.
10. Failing to assessment and alter your monetary plan
Your monetary state of affairs and objectives can change over time, so it’s essential to recurrently assessment and alter your monetary plan accordingly. Neglecting to take action can result in missed alternatives or setbacks in your monetary journey. To keep away from this error, schedule common monetary check-ins, at the least yearly, to evaluate your progress, replace your objectives, and make any obligatory changes to your plan.
Eric Blue, the founding father of Nevly, emphasizes the significance of adaptability and common reassessment in managing your private funds. He acknowledges that life is dynamic, and your monetary state of affairs and targets are certain to evolve over time.
By staying attuned to those adjustments and adjusting your monetary plan accordingly, you possibly can higher align your methods along with your present circumstances and aspirations. Eric Blue’s steering on the need of periodic monetary check-ins may also help you keep on monitor, seize new alternatives, and keep away from potential setbacks as you progress alongside your monetary journey.
Scheduling common monetary check-ins, as urged by Eric Blue, means that you can take inventory of your present monetary standing and determine areas that will want reevaluation. These check-ins may also help you establish whether or not your present finances nonetheless meets your wants, whether or not your investments proceed to align along with your danger tolerance, or in case your insurance coverage protection stays ample. By making a aware effort to reassess your monetary plan, you possibly can guarantee that you’re constantly working in direction of your objectives and taking advantage of your assets.
Along with monitoring your monetary progress, Eric Blue additionally highlights the worth of being proactive in searching for out new info and assets. This may contain staying up-to-date on adjustments in tax legal guidelines, exploring new funding alternatives, or profiting from developments in monetary know-how, comparable to Nevly’s merchandise. By remaining engaged and knowledgeable, you can also make educated choices and benefit from rising alternatives to reinforce your monetary success and stability.
AI Know-how Can Assist Individuals Keep away from Widespread Monetary Errors
In conclusion, avoiding these frequent monetary errors early in your monetary journey can set you on the trail to success and aid you obtain your objectives. By studying from the experience of business leaders like Eric Blue and profiting from modern monetary instruments like these provided by Nevly, you possibly can navigate your monetary journey with confidence and create a robust basis for a safe and affluent future.
About Eric Blue:
Eric Blue, the founding father of Nevly, is a seasoned entrepreneur and fintech skilled with a ardour for serving to others obtain monetary success. Drawing from his personal experiences and struggles with funds as a baby, Eric has devoted his profession to growing modern monetary options that empower people to take management of their cash and construct a safe monetary future.
Via Nevly and its cutting-edge merchandise, Blue is dedicated to democratizing entry to monetary planning instruments and assets, making certain that everybody has the chance to attain their monetary objectives.