Menu #50: How AI and automation can impact your financial future

STATS STACK 🥞

$1,370 is the current national median monthly rent, reflecting a $3 decrease from last month and a $7 drop compared to January 2024. The national rent index has declined for the sixth consecutive month, dipping by 0.2 percent in January. (Source: ApartmentList.com)

350 million weekly active users were recorded on ChatGPT after tripling its user base. As of September, 1 million users were paying $25 or more per month, contributing to $333 million in monthly revenue and $4 billion in annualized revenue by late 2024. (Source: Bay Area Times)

67% of eighth-graders scored at a basic or better reading level in 2024, marking the lowest share since testing began in 1992, according to a closely watched federal exam. Fourth-graders fared even worse, with only 60% meeting the benchmark, nearing record lows as reading skills among American students continue to decline.(Source: WSJ)

DEEP DISH 🍕

How AI and Automation Can Impact Your Financial Future

Artificial intelligence (AI) and automation are transforming industries, reshaping careers, and revolutionizing how we manage money. What was once the stuff of science fiction is now a reality influencing our daily lives—often in ways we don’t even realize. Whether you’re already reaping the benefits of this technological shift or navigating its challenges, understanding how AI impacts your financial future is critical for staying ahead.

The Upside: How AI is Enhancing Financial Management

AI and automation have made managing money easier, faster, and more accessible. Below are four ways these technologies are working to your advantage:

1. Smarter Investment Tools

Robo-advisors like Betterment, Wealthfront, and platforms offered by Vanguard or Charles Schwab use AI to create and manage diversified investment portfolios tailored to your financial goals. These services are both cost-effective and data-driven. They usually charge lower fees than traditional financial advisors, helping you save money. They also use technology to automatically adjust your investments, making sure your portfolio stays on track with your goals and risk level.

This democratizes investing, making professional-grade portfolio management accessible to people who may not have the resources to hire a financial advisor.

2. Automated Savings

AI-powered apps like Qapital and Acorns analyze your spending habits to identify how much you can save and automate the process for you. These tools make saving effortless, helping you build an emergency fund, save for big financial goals, or invest spare change without even thinking about it.

3. Personalized Financial Insights

Budgeting apps like YNAB (You Need a Budget) use AI to track spending patterns, forecast future expenses, and offer tailored advice. Some tools even suggest subscription cancellations, refinancing options, or better credit card deals, optimizing your financial habits.

4. Enhanced Fraud Detection

AI is transforming security in banking. Algorithms analyze your spending patterns to detect anomalies, flagging potential fraud faster than ever before. This keeps your money safer while reducing the hassle of dealing with unauthorized transactions.

The Challenge: Job Disruption and Economic Shifts

While AI and automation create efficiencies, they also present challenges—especially in the job market. Here’s how these changes might impact your financial future:

Job Automation

AI and automation are taking over repetitive, low-skill tasks across many industries, including manufacturing, retail, and administrative work. Even some white-collar jobs, like accounting, legal research, and financial analysis, are seeing parts of their work automated by AI tools.

This shift means workers need to adapt by learning skills that complement AI, such as critical thinking and problem-solving. While some jobs may become obsolete, new opportunities are emerging in fields like technology, data science, and AI-related industries.

Economic Inequality

As AI increases productivity, it can also concentrate wealth. Companies that effectively leverage AI may grow exponentially, potentially widening the gap between high-income earners and everyone else.

To take advantage of this shift, consider investing in companies at the forefront of AI innovation could be a strategic way to benefit from this technological shift. At the same time, stay agile by diversifying your income streams so that you can mitigate risks associated with job disruption.

Privacy Concerns

AI relies on massive amounts of personal data to function effectively, raising concerns about privacy and data security. Financial tools that leverage AI may require access to sensitive information, creating risks if safeguards fail.

In order to mitigate against this risk, it's important to research the apps and services you use to ensure they prioritize data security. Taking the time to verify their security measures can help protect your personal information. Additionally, make it a habit to monitor your accounts regularly. Keeping an eye out for any unauthorized activity can help you catch potential issues early and take action before they become bigger problems.

Preparing for the Future

The impact of AI and automation isn’t something you can ignore—it’s reshaping how we live and work. Here’s how you can prepare for the financial future it’s creating:

Embrace Lifelong Learning

As industries evolve, continuous learning is crucial. Invest in developing skills that AI can’t easily replicate. Consider taking online courses or attending workshops to stay competitive in your field.

Leverage AI Tools

Leverage AI to your advantage by incorporating it into your daily work to increase your efficiency and productivity. By reducing manual effort, you free up time and mental energy to focus on higher-value activities that drive growth and innovation.

Diversify Income Streams

In a rapidly changing economy, having multiple sources of income is a smart way to safeguard against job disruption. This could include freelancing, starting a side hustle, or investing in passive income opportunities.

Plan for Uncertainty

Build a robust financial safety net by establishing an emergency fund that covers three to six months of living expenses, providing a cushion for unexpected events. Equally important is maintaining a well-diversified investment portfolio that balances risk while positioning you for long-term growth.

Final Thoughts

AI and automation are reshaping the financial landscape in ways that are both exciting and challenging. By embracing the opportunities they offer—while staying mindful of their risks—you can harness these changes to build a stronger financial future.

This week, take a moment to evaluate how you’re using technology in your financial life. Are there tools you could adopt to save time, improve efficiency, or prepare for the future? Remember, the key to navigating this era of rapid change is staying informed, adaptable, and proactive.

Here’s to thriving in a tech-driven financial world.

SWEET LINKS 🍰
Digital bites we think you’ll like

Did DeepSeek cheat? — Microsoft, a major investor in OpenAI, is working with OpenAI to investigate whether a group linked to the Chinese AI startup DeepSeek accessed OpenAI’s data without permission.

What’s the deal with tariffs? — Tariffs, which are taxes on imported goods like toys, produce, or cars, are a major topic on Wall Street. When businesses import these products, they have three choices: pass the extra cost to consumers, take a hit on their profits, or switch to buying from U.S. manufacturers. Many economists and business leaders worry that tariffs could lead to higher prices, making everyday goods more expensive. However, supporters argue that tariffs will push more foreign companies to manufacture their products in the U.S., creating more jobs and boosting the economy.

One-month pause on tariffs — The 25% tariffs on Mexico and Canada have been delayed for at least a month. Meanwhile, tariffs on China are still moving forward as planned, and China is responding with its own tariffs on U.S. goods.