According to the Federal Reserve, American household debt is at a record high. Americans held $16.9 trillion in household debt at the end of 2022, up $2.75 trillion since only 2019 — $986 billion of which is credit card debt.
Clearly, the country is experiencing an issue with financial literacy and unsustainable debt ratios. There are plenty of people who have offered solutions to this problem — and with the emergence of advanced AI technology, a better understanding of finances and the path to prosperity may be just around the corner.
The burden of debt
Carrying debt can be a burden on people and entire families that can feel insurmountable, especially with inflation continuing to outpace wages and the cost of living rising exponentially in many areas of the country. Debt can prevent people from buying or renting a home or purchasing a car and, in some cases, could even hamper career growth.
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Anyone can find themselves in debt, but studies show that young people are especially burdened by debts and are falling behind on their payments more often than older generations. Financial literacy is not a standard class in most schools, though it is becoming a more popular option as it becomes increasingly evident that every generation seems to have missed out on some crucial financial literacy skills. People cannot possibly expect to reach their life goals if the financial aspect of those goals is not well in hand.
The power of AI
Artificial intelligence has changed the way we live, work, and play, but is also affecting the way we invest and perform day-to-day banking tasks. However, the process of seeking financial advice has lagged in terms of technology, as many still rely on paper statements, in-person visits to their hometown advisor, and hesitancy in making moves big or small.
Digital tools in financial management are nothing new — many of us have been paying our bills online for years — but AI takes the digital revolution a step further. People now have the ability to interact directly with AI to ask financial questions, receive financial advice, and obtain projections on their own accounts to help them plan for the future. The “intelligence” component of AI is helping fill in the gaps left by a lack of financial literacy teaching.
Making decisions is one of the hardest parts of financial management, as many do not understand all the complexities of big purchases, like mortgages, or investing in the stock market. With AI, they can get personalized advice based on their own accounts, track record with debt repayment and saving, and their stated goals. With nudging from AI, people can make more sound financial decisions that will take them on a path away from debt and towards a more financially secure future.
Debt repayment organization and a solid plan
Debt will never go away unless there is a solidly developed plan to handle it. While some have favored pen-and-paper plans for generations, taking advantage of the AI revolution can help people bust through the brick walls preventing them from being truly financially free.
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AI can gather all of your financial information, quickly analyze it, and produce a debt repayment plan that makes sense for your budget and the way that you spend. AI has already been integrated into many financial tools, such as savings tools like Digit and personalized AI financial assistants like Eyeballs Financial. With secure and automatic access to one’s financial fitness outlook, people are better able to save and pay off debt. The process of paying bills can be completely automated, and if any questions should arise, the AI tool has learned your habits and your accounts and can steer you in the right direction.
Financial independence cannot be achieved without a solid debt repayment plan and a sound strategy for saving and investing. Today’s AI is personalized, intuitive, accessible, and proactive, meaning it can help even the most financially illiterate people get a grasp on their finances and finally break the generational cycle of debt.
We are still in the infancy stages of the AI revolution, so it is unlikely that people will be ready to place all of their financial trust in the hands of artificial intelligence just yet. However, AI is advancing at a breakneck speed and soon these intuitive tools will take their place at the family dinner table budget meetings, and the old pen and paper will be set aside.
As it stands, 340 million Americans are mired in debt, with very few tools at their disposal with which to claw their way out. But with AI showing that financial organization is possible, perhaps the next generation will be on their way to being the first to carry little to no debt.
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