While technology has given us more control over our financial lives, it may also change how we define money or use it.
Much evidence clearly shows that technology is affecting the financial decision-making process. If we consider this fact true and couple it with the deep-rooted financial attitude and behavioral biases, there can be some negative consequences.
These behavioral biases can work together with emotion and forces investors to make bad decisions. But, despite the consequences, you also can’t deny that technology can be a friend and help people better track their finances.
In addition, technology plays an important role in changing its definition and how we perceive money today.
What once required a trip to the bank can be done with just a few clicks from your smartphone. So we have evolved from checkbooks being essential to a completely cashless society.
While these changes do have made managing our finances easier, it has certainly raised some new challenges.
Impact On How We Define Money
When money is in physical forms like notes or coins, we tend to place a higher value than on the money that is in digital form or card-based transactions.
For example, if you were given $200 to spend, you will remember every penny spent. But if the same amount is given to you in the form on the card, you would not even realize its importance and just use it completely even without realizing it.
This shows how technology has affected the definition and importance of money.
The example that we have here is just one of the behavioral changes that technology has influenced. Different behavioral changes around money become harder to manage in a cashless society.
In addition, digital currency is experiencing many hacks which decrease the valuation of digital money. Here is a bitcoin hack review that will help you understand the current status of digital currency.
For generation Z, physical money is the only item they have had minimal exposure to. Perhaps all their pocket money goes into their savings account, and they have practiced using only cars for any kind of payment.
Right now, it is really hard to tell how deep the impact is. With the research data, we have stated that it is hard to grasp the true value of a dollar earned and spent.
Impact On How We Manage Money
Not only how we define and use money, but technology has also impacted how we manage them.
1. Visibility
Despite how the definition of money has changed because of technology, it has certainly given people massive benefits – Traceability.
With the technology in the transaction medium, you can track the flow of your money and where it is going. Simply log on to your bank portal, you will have the ability to see account details, investment performances, and other information in real-time.
2. Budgeting
With all this transparency comes knowledge. Today budgeting has become digitized. No more or investing hours and hours into number crunching and statement hunting. Thanks to technology, today, we have hundreds of budgeting tools offering tailor-made solutions.
People are using software applications to get a complete view of their financial transactions, spending habits, expenses, and income, all in one place.
Take Caution
While many positives have come with the digital age, we must understand the underlying risks. Technology has certainly made the process of sending and receiving money easier. However, at the same time, it has exposed the transaction to new risks.
Risks include:
- Phishing.
- Spyware.
- Cyber Attacks.
- Hacks.
As technology continues to evolve, the financial world continues to transform, and the definition of money will keep on changing. We can only wait and see how things proceed.
Read Also:
