[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.]
Credit cards can be a helpful financial tool when used responsibly, but they can also lead to a cycle of debt if not managed properly. According to the Federal Reserve’s latest quarterly report on household debt and credit, total household debt rose by $148 billion, or 0.9 percent, to $17.05 trillion in the first quarter of 2023. To avoid this mistake, only use credit cards for planned purchases, and always pay off your balance in full each month to avoid interest charges.
Credit cards offer various benefits, such as building credit history, earning rewards, and providing a convenient payment method for everyday transactions. However, it’s essential to use them wisely to avoid falling into the trap of accumulating high-interest debt. By using credit cards for planned purchases and budgeting appropriately, you can take advantage of these benefits without compromising your financial health.
Paying off your credit card balance in full each month is a crucial habit to develop, as it not only saves you from paying interest charges but also helps maintain and improve your credit score. A lower credit utilization ratio can positively impact your credit score, making it easier for you to qualify for loans and secure favorable interest rates in the future.
Lastly, it’s essential to be selective when choosing a credit card that aligns with your financial goals and spending habits. Carefully consider factors such as interest rates, fees, and rewards programs before committing to a specific card. By being strategic with your credit card usage and diligently managing your payments, you can successfully leverage credit cards as a valuable financial tool while avoiding the pitfalls of debt.
AI technology can also help people get out of credit card debt. NewsWeek has an article titled How to pay off Credit Card Debt Faster Using Artificial Intelligence that provides an overview of some AI-driven apps that can help consumers trying to get out of credit card debt.
One of the AI tools that the article talks about is called Tally. NewsWeek writes that “Tally uses it’s computing power to analyze APRs, credit card balances to offer a tentative debt-free date, provided that you make the indicated monthly payments.”
You will also want to use AI to help choose the right credit cards. We have an article on this topic. This can help you avoid using a card that is likely to get you into debt due to high interest rates or onerous late fees.
4. Ignoring your credit score
Your credit score plays a crucial role in your financial life, as it affects your ability to obtain loans, credit cards, and even housing. Yet, a 2020 Consumer Federation of America survey found that only 57% of respondents knew their credit score. To avoid this mistake, Eric Blue suggests you regularly monitor your credit score and take steps to improve it, such as paying bills on time and keeping your credit utilization low.
Staying informed about your credit score is an essential aspect of financial literacy, as it allows you to understand your current credit standing better and identify areas for improvement. Several free online services offer access to your credit score, making it easy to monitor any changes or discrepancies. By keeping a close eye on your credit score, you can proactively address any issues that might arise and maintain a healthy credit profile.
Improving your credit score involves a combination of responsible financial habits and sound credit management strategies. Consistently paying your bills on time, maintaining a low credit utilization ratio, and avoiding excessive applications for new credit are all effective ways to boost your credit score; Newly’s ARLO app can help you do this and more.
Additionally, ensuring that your credit report is accurate by regularly reviewing it and disputing any errors can further contribute to a strong credit profile. By taking these steps and staying committed to nurturing your credit score, you’ll be better positioned to take advantage of financial opportunities and secure a brighter financial future.
AI technology can also help people that are trying to improve their credit scores. A number of personal financial apps like Mint and Credit Sesame have a variety of artificial intelligence algorithms that help people make a number of better financial decisions.
These algorithms can do a lot to help people trying to get out of debt, which is one of the reasons people have poor credit scores. They can also help people better track payment deadlines so they can avoid hurting their credit score by making missed payments.
5. Failing to save for retirement
Saving for retirement is essential for securing your financial future, but many people neglect this aspect of their financial plan. A 2020 survey by the Transamerica Center for Retirement Studies revealed that 45% of American workers have no retirement savings. To avoid this mistake, start saving for retirement as early as possible and take advantage of employer-sponsored retirement plans and tax-advantaged accounts, such as a 401(k) or IRA.
Starting to save for retirement early in your career allows you to maximize the power of compounding interest, which can significantly increase your retirement savings over time. Even modest contributions to your retirement account can add up and grow exponentially as the years go by.
By participating in employer-sponsored retirement plans, you can also benefit from employer matching contributions, which essentially equates to free money towards your retirement savings. Utilizing tax-advantaged accounts like a 401(k) or IRA can further optimize your retirement savings strategy by providing tax benefits that encourage long-term saving. By making retirement savings a priority and leveraging the available tools and resources, you’ll be well on your way to securing a comfortable and financially stable retirement.
There are many ways that artificial intelligence can help you better prepare for retirement. AI technology can use predictive analytics algorithms to anticipate future financial needs.
Some of these tools use very advanced algorithms that account for a variety of different variables, including expected life expectancy based on health conditions, cost of living in your area and anticipated lifestyle after retiring.
6. Not having financial goals
Without clear financial goals, it’s difficult to stay motivated and focused on your financial journey. A 2018 study by Charles Schwab found that individuals with a written financial plan were more likely to save, invest, and feel confident about their financial future. To avoid this mistake, set short-term and long-term financial goals, such as paying off debt, saving for a down payment on a home, or funding your child’s education, and create a plan to achieve them.
Setting clear financial goals is a critical component of any successful financial plan, as it provides direction and a sense of purpose. By establishing both short-term and long-term objectives, you can create a roadmap that guides your financial decisions and helps you stay focused on your priorities. This, in turn, enables you to allocate your resources more effectively and make progress towards your goals at a steady pace.
Eric Blue knows the importance of this step in developing a secure financial future, that’s why he developed his business, Nevly, to help others achieve successful financial planning. Developing a plan to achieve your financial goals involves breaking them down into actionable steps and identifying the necessary strategies and tools to reach them.
By creating a detailed plan, you’re more likely to stay on track and maintain the discipline required to follow through with your financial commitments. This sense of organization and structure can significantly contribute to your overall financial success.
Monitoring and adjusting your financial goals as needed is equally important, as your circumstances and priorities may change over time. Regularly reviewing your progress and updating your plan accordingly ensures that your goals remain relevant and attainable. By setting clear financial goals and diligently working towards them, you can cultivate a sense of accomplishment and confidence in your financial future.
7. Taking on too much debt
Debt can quickly spiral out of control if not managed carefully. According to the Federal Reserve, in a fourth-quarter report of 2022, the total U.S. household debt was $16.90 trillion. To avoid this mistake, Eric Blue encourages consumers only to take on debt for essential purchases, such as a home or education, and prioritize paying on your loans as quickly as possible. Additionally, avoid high-interest debt, such as payday loans or credit card debt, which can be difficult to pay off and can negatively impact your financial health.
Eric Blue, the founder of Nevly, emphasizes the importance of being mindful when taking on debt and making informed decisions about the types of debt you’re willing to incur. By focusing on essential purchases and avoiding high-interest debt, you can minimize the potential burden on your financial health and maintain a more sustainable debt-to-income ratio. Eric Blue’s advice on managing debt responsibly can help you better navigate your financial journey and avoid the pitfalls hindering your progress.
Creating a strategic debt repayment plan is another key component in managing debt effectively. Prioritize paying off high-interest debt first, as this can save you money in the long run and help you become debt-free more quickly. Consider implementing debt repayment strategies, such as the debt snowball or debt avalanche methods, to streamline the process and stay motivated.
By following Eric Blue’s guidance and using resources like Nevly Money and the ARLO app, taking a proactive approach to debt management, you can achieve greater financial stability and work towards a debt-free future with confidence.
This is another area where AI can help you make better financial decisions. You can use a variety of AI apps that can recommend certain financial goals that you may not have otherwise considered.
8. Neglecting to invest
Investing is a powerful tool for growing your wealth over time, but many people shy away from it due to a lack of knowledge or fear of risk. According to a 2020 Gallup poll, only 55% of Americans reported owning stocks. To avoid this mistake, educate yourself about investing basics and consider working with a financial advisor or using the ARLO app to help you build a diversified investment portfolio that aligns with your goals and risk tolerance.
Eric Blue, the founder of Nevly, recognizes the importance of investing as a means of securing long-term financial growth and stability. He encourages individuals to overcome their apprehensions and gain a solid understanding of investing fundamentals. By doing so, you’ll be better equipped to make informed decisions that can contribute to your overall financial well-being. Eric Blue’s insights on the value of investing emphasize the need for individuals to embrace this essential aspect of personal finance and leverage its potential for wealth creation.
For those who may feel overwhelmed or uncertain about where to begin, working with a financial advisor or utilizing a robo-advisor can be an excellent starting point. These professionals and platforms can provide personalized guidance and help you develop a diversified investment portfolio tailored to your financial goals and risk tolerance. With the expertise of a financial advisor or the convenience of a robo-advisor, you can benefit from professional insights and support as you embark on your investing journey.
Eric Blue’s emphasis on the importance of investing serves as a reminder that taking calculated risks and diversifying your financial portfolio can lead to significant long-term benefits. By educating yourself, seeking professional guidance, and being proactive in your investment strategy, you can work towards achieving your financial goals and setting yourself up for a secure and prosperous future.
Of course, It is important to make sure that you invest in the right assets. Some People make the mistake of investing in assets that have a lot of glamor attached to them, even though they are not likely to be profitable long term.
AI technology can be very beneficial for people that want to make better investing decisions. These tools can conduct the best valuation calculations to determine The long term profitability of various assets.
9. Not having insurance
Insurance is essential for protecting your financial well-being in the event of unexpected events, such as accidents, illness, or natural disasters. However, a 2021 Policygenius survey found that 33% of Americans don’t have life insurance, and 16% don’t have health insurance. To avoid this mistake, ensure you have adequate insurance coverage for your needs, including health, life, disability, and property insurance.
Eric Blue underscores the significance of insurance as a critical component of a comprehensive financial plan. He stresses the importance of safeguarding your financial well-being and that of your loved ones by obtaining sufficient insurance coverage in various areas, such as health, life, disability, and property insurance. By following Eric Blue’s advice and proactively securing appropriate insurance policies, you can effectively mitigate potential risks, navigate unforeseen events more efficiently, and maintain financial stability for yourself and your family.
AI can also help you anticipate potential problems that you may need to use insurance to prevent. This can help you choose the best insurance plan to cover unexpected problems.
10. Failing to review and adjust your financial plan
Your financial situation and goals can change over time, so it’s important to regularly review and adjust your financial plan accordingly. Neglecting to do so can lead to missed opportunities or setbacks on your financial journey. To avoid this mistake, schedule regular financial check-ins, at least annually, to assess your progress, update your goals, and make any necessary adjustments to your plan.
Eric Blue, the founder of Nevly, emphasizes the importance of adaptability and regular reassessment in managing your personal finances. He acknowledges that life is dynamic, and your financial situation and objectives are bound to evolve over time.
By staying attuned to these changes and adjusting your financial plan accordingly, you can better align your strategies with your current circumstances and aspirations. Eric Blue’s guidance on the necessity of periodic financial check-ins can help you stay on track, seize new opportunities, and avoid potential setbacks as you progress along your financial journey.
Scheduling regular financial check-ins, as suggested by Eric Blue, allows you to take stock of your current financial standing and identify areas that may need reevaluation. These check-ins can help you determine whether your existing budget still meets your needs, whether your investments continue to align with your risk tolerance, or if your insurance coverage remains adequate. By making a conscious effort to reassess your financial plan, you can ensure that you are consistently working towards your goals and making the most of your resources.
In addition to monitoring your financial progress, Eric Blue also highlights the value of being proactive in seeking out new information and resources. This can involve staying up-to-date on changes in tax laws, exploring new investment opportunities, or taking advantage of advancements in financial technology, such as Nevly’s products. By remaining engaged and informed, you can make educated decisions and take advantage of emerging opportunities to enhance your financial success and stability.
AI Technology Can Help People Avoid Common Financial Mistakes
In conclusion, avoiding these common financial mistakes early in your financial journey can set you on the path to success and help you achieve your goals. By learning from the expertise of industry leaders like Eric Blue and taking advantage of innovative financial tools like those offered by Nevly, you can navigate your financial journey with confidence and create a strong foundation for a secure and prosperous future.
About Eric Blue:
Eric Blue, the founder of Nevly, is a seasoned entrepreneur and fintech expert with a passion for helping others achieve financial success. Drawing from his own experiences and struggles with finances as a child, Eric has dedicated his career to developing innovative financial solutions that empower individuals to take control of their money and build a secure financial future.
Through Nevly and its cutting-edge products, Blue is committed to democratizing access to financial planning tools and resources, ensuring that everyone has the opportunity to achieve their financial goals.