The launch of ChatGPT led to a wave of democratization that’s made artificial intelligence (AI) useful in everyday life.
It’s no longer an esoteric technology that interests only nerds. Now, people use the technology to write, create images, edit videos, analyze data and write code.
As AI continues to impact every industry, the personal finance industry hasn’t been left behind. The AI-powered personal finance management market was valued at $1.48 billion in 2024, according to Research and Markets.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.
Profit and prosper with the best of expert advice – straight to your e-mail.
Kiplinger’s Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.
It’s projected to be a $1.63 billion market by the end of 2025, at a compounded annual growth rate (CAGR) of 10.1%, and a $2.37 billion market in 2029, at a CAGR of 9.8%.
From budgeting, saving and investing to robo-advising, financial coaching, credit scoring and debt management, AI continues to shape personal finance management, providing value across the globe.
Let’s look at some of the applications of AI in personal finance, the challenges with adopting AI and tips for wise usage of AI.
AI and budgeting
AI-powered tools can help with:
Data aggregation and categorization. AI-powered tools such as Monarch, YNAB, PocketGuard and Mint AI, among others, can pull data from your bank accounts, credit cards and payment history to identify spending patterns and categorize transactions.
Based on this information, you can create a budget to gain better control of your finances. These apps can also use relevant information to suggest areas in which you can modify spending habits to pursue more important goals.
Automated budget creation. AI-powered tools such as Galaxy.ai and Tiller can create a personalized budget based on your income, expenses and financial goals. They’ll suggest how you can better allocate your income across expenses to help achieve your goals.
Predictive forecasting. Some budgeting tools (Drivetrain and SuperAGI, among others) can use AI to forecast how your budget will change if your income changes, unexpected expenses arise or you take out a loan.
Anomaly detection. Some AI tools (such as Expenzey and Cleo) can use your past spending habits to flag unusual transactions or overspending in real time. They help prevent fraud and ensure you stay on budget.
Expenses tracking. Budgeting tools allow you to see how close you are to reaching your budget limits. Examples include Mint AI and Cleo.
Bill negotiation. Apps such as PocketGuard can identify bills that might be too high. They’ll automatically negotiate with the relevant service providers to lower your expenses.
Automated bill payment. SuperAGI and Mint AI, among others, automate bill payments to a range of providers.
AI and saving
For some, the main point of budgeting is to foster saving.
AI-powered budgeting tools have features that can help. These include:
- Identifying areas to cut expenses. SuperAGI, YNAB, Tiller and PocketGuard
- Paying yourself first by automating savings. PocketGuard, Albert and Oportun
- Identifying and canceling unwanted subscriptions. Rocket Money and Subscription Stopper
AI, investing and financial planning
Some AI tools can suggest how to invest based on your financial goals, time horizon and risk tolerance.
For example, Empower provides investment recommendations based on investment goals and risk tolerance. It also offers retirement planning tools.
Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.
Some AI-powered tools provide comprehensive financial planning that goes beyond investment management.
For example, Albert combines AI with human advisers to provide comprehensive money management.
Even robo-advisers such as Acorns and Wealthfront use AI to optimize client portfolios and automate portfolio rebalancing.
AI and financial education
Albert has a feature called Genius in which an AI tool can act as a virtual financial coach.
Large-language models (LLMs) such as ChatGPT, Perplexity and Claude, among others, can also act as a financial coach and provide a comprehensive financial education.
Most of the apps we’ve discussed are also built in a chatbot style, so you can ask questions and get personalized answers if they have access to your financial information.
AI, credit scoring and debt management
Some financial institutions now use AI for credit scoring. These combine traditional credit data with alternative sources such as utility bills, transaction history, income, work history and other behavioral data to evaluate creditworthiness. Examples include FICO Score XD and Zest AI.
Consumers can use platforms such as Experian Boost and Credit Karma to improve their credit scores. They use AI to analyze multiple data points to provide personalized suggestions.
Navigating the risks of AI in personal finance
Despite the benefits that AI provides, certain risks remain with its usage in general and in personal finance management in particular.
Some of the most important include:
Limits to the possibility of personalization. AI-powered apps don’t have the emotional intelligence and human judgment required to offer truly personalized advice.
While it can help with the automation of repetitive tasks and the provision of information, the emotive element makes human financial advisers necessary.
Privacy concerns. To provide more valuable advice, AI-powered apps will require more personal information, including sensitive personal data. Given concerns about cybersecurity, this is a risk.
AI models can be hacked to make the information they provide reflect a particular ideology or the personal views of the attacker.
Factual mistakes. Generative AI can be factually inaccurate in many cases. They sometimes cite sources that don’t exist.
What can you do about these risks?
While AI-powered apps can help, they shouldn’t be a replacement for human financial advisers.
Instead, advisers should find a way to integrate AI into their activities so they can provide maximum value to their clients.
Other ways to mitigate risks:
Data-protection policies. Before using any AI-powered app, read its data-protection policies. Choose those you’re confident have the policies in place to protect you.
Don’t ignore reputable blogs. Look for blogs that provide information from financial experts to confirm what AI tells you.
By familiarizing yourself with reputable blogs, you become insulated from false information, because LLMs might not always be objective.
Provide AI with accurate information. The quality of what you get from AI-powered apps is proportional to the quality of the information you provide.
If you’re sure a platform can protect your data, provide relevant information to provide better value.
Final thoughts
The opportunities for the use of AI in personal finance are enormous. However, given the risks, it is up to you to use AI-powered apps responsibly.
If you have a human adviser, consult them before making significant financial choices based on AI recommendation.
