[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

Bank cards is usually a useful monetary instrument when used responsibly, however they’ll additionally result in a cycle of debt if not managed correctly. In keeping with the Federal Reserve’s newest quarterly report on family debt and credit score, complete family debt rose by $148 billion, or 0.9 p.c, to $17.05 trillion within the first quarter of 2023. To keep away from this error, solely use bank cards for deliberate purchases, and all the time repay your steadiness in full every month to keep away from curiosity expenses.

Bank cards provide varied advantages, akin to constructing credit score historical past, incomes rewards, and offering a handy fee methodology for on a regular basis transactions. Nevertheless, it’s important to make use of them correctly to keep away from falling into the lure of accumulating high-interest debt. By utilizing 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 a vital behavior to develop, because it not solely saves you from paying curiosity expenses 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 together with your monetary targets and spending habits. Rigorously contemplate elements akin to rates of interest, charges, and rewards packages earlier than committing to a selected card. By being strategic together with your bank card utilization and diligently managing your funds, you possibly can efficiently leverage bank cards as a precious monetary instrument whereas avoiding the pitfalls of debt.

AI know-how may assist folks get out of bank card debt. NewsWeek has an article titled Methods to repay Credit score Card Debt Sooner Utilizing Synthetic Intelligence that gives an summary 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, supplied that you simply make the indicated month-to-month funds.”

Additionally, you will wish to use AI to assist select the suitable bank cards. We have an article on this matter. This may also help you keep away from utilizing a card that’s prone to get you into debt resulting from 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 means to acquire loans, bank cards, and even housing. But, a 2020 Client 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 usually monitor your credit score rating and take steps to enhance it, akin to paying payments on time and preserving your credit score utilization low.

Staying knowledgeable about your credit score rating is an important side of monetary 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 providers provide entry to your credit score rating, making it straightforward to observe any adjustments or discrepancies. By preserving an in depth eye in your credit score rating, you possibly can proactively handle any points which may come up and preserve a wholesome credit score profile.

Bettering your credit score rating includes a mix of accountable monetary habits and sound credit score administration methods. Constantly paying your payments on time, sustaining a low credit score utilization ratio, and avoiding extreme purposes for brand spanking 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, guaranteeing that your credit score report is correct by usually reviewing it and disputing any errors can additional contribute to a powerful 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 assist folks which might be making an attempt to enhance their credit score scores. A variety of private monetary apps like Mint and Credit score Sesame have quite a lot of synthetic intelligence algorithms that assist folks make numerous higher monetary choices.

These algorithms can do so much to assist folks making an attempt to get out of debt, which is likely one of the causes folks have poor credit score scores. They’ll additionally assist folks higher observe fee 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 important for securing your monetary future, however many individuals neglect this side of their monetary plan. A 2020 survey by the Transamerica Middle for Retirement Research revealed that 45% of American staff don’t have any retirement financial savings. To keep away from this error, begin saving for retirement as early as doable and benefit from employer-sponsored retirement plans and tax-advantaged accounts, akin to a 401(ok) or IRA.

Beginning to save for retirement early in your profession means that you can maximize the ability of compounding curiosity, which may considerably enhance 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, you can too profit from employer matching contributions, which basically equates to free cash in the direction of your retirement financial savings. Using tax-advantaged accounts like a 401(ok) 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 effectively in your option to securing a snug and financially steady retirement.

There are lots of 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 quite a lot of completely different variables, together with anticipated life expectancy primarily based on well being situations, price of residing in your space and anticipated way of life after retiring.

6. Not having monetary targets

With out clear monetary targets, it’s troublesome to remain motivated and centered in your monetary journey. A 2018 examine by Charles Schwab discovered that people with a written monetary plan had been extra prone 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 targets, akin to paying off debt, saving for a down fee on a house, or funding your baby’s schooling, and create a plan to realize them.

Setting clear monetary targets is a vital element of any profitable monetary plan, because it gives course and a way of function. By establishing each short-term and long-term targets, you possibly can create a roadmap that guides your monetary choices and helps you keep centered in your priorities. This, in flip, allows you to allocate your assets extra successfully and make progress in the direction of your targets at a gradual tempo.

Eric Blue is aware of the significance of this step in creating a safe monetary future, that’s why he developed his enterprise, Nevly, to assist others obtain profitable monetary planning. Creating a plan to realize your monetary targets includes breaking them down into actionable steps and figuring out the mandatory methods and instruments to succeed in them.

By creating an in depth plan, you’re extra prone to keep on observe and preserve the self-discipline required to observe via together with your monetary commitments. This sense of group and construction can considerably contribute to your total monetary success.

Monitoring and adjusting your monetary targets as wanted is equally necessary, as your circumstances and priorities might change over time. Usually reviewing your progress and updating your plan accordingly ensures that your targets stay related and attainable. By setting clear monetary targets and diligently working in the 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 rigorously. In keeping with 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, akin to a house or schooling, and prioritize paying in your loans as shortly as doable. Moreover, keep away from high-interest debt, akin to payday loans or bank card debt, which will be troublesome to repay and might 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 in regards to the varieties of debt you’re keen to incur. By specializing in important purchases and avoiding high-interest debt, you possibly can decrease 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 compensation plan is one other key element in managing debt successfully. Prioritize paying off high-interest debt first, as this will prevent cash in the long term and assist you to turn out to be debt-free extra shortly. Contemplate implementing debt compensation 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 higher monetary stability and work in the 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 quite a lot of AI apps that may advocate sure monetary targets that you could be not have in any other case thought-about.

8. Neglecting to speculate

Investing is a robust instrument for rising your wealth over time, however many individuals shrink back from it resulting from a lack of information or worry of danger. In keeping with 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 contemplate working with a monetary advisor or utilizing the ARLO app that will help you construct a diversified funding portfolio that aligns together with your targets and danger tolerance.

Eric Blue, the founding father of Nevly, acknowledges the significance of investing as a way of securing long-term monetary progress and stability. He encourages people to beat their apprehensions and achieve a strong understanding of investing fundamentals. By doing so, you’ll be higher geared up to make knowledgeable choices that may contribute to your total monetary well-being. Eric Blue’s insights on the worth of investing emphasize the necessity for people to embrace this important side of private 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 will be a superb place to begin. These professionals and platforms can present personalised steering and assist you to develop a diversified funding portfolio tailor-made to your monetary targets 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, in search of skilled steering, and being proactive in your funding technique, you possibly can work in the direction of reaching your monetary targets and setting your self up for a safe and affluent future.

In fact, It is very important just remember to spend money on the suitable belongings. Some Individuals make the error of investing in belongings which have lots of glamor connected to them, although they don’t seem to be prone to be worthwhile long run.

AI know-how will be very helpful for those who wish to make higher investing choices. These instruments can conduct one of the best valuation calculations to find out The long run profitability of assorted belongings.

9. Not having insurance coverage

Insurance coverage is important for safeguarding your monetary well-being within the occasion of sudden occasions, akin 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’ve got 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 vital element of a complete monetary plan. He stresses the significance of safeguarding your monetary well-being and that of your family members by acquiring enough insurance coverage protection in varied areas, akin to well being, life, incapacity, and property insurance coverage. By following Eric Blue’s recommendation and proactively securing applicable 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 assist you to anticipate potential issues that you could be want to make use of insurance coverage to forestall. This may also help you select one of the best insurance coverage plan to cowl sudden issues.

10. Failing to assessment and alter your monetary plan