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Technology is having a tremendous impact on a variety of businesses, including banking and finance. For millions of people, using digital technology to access financial services is becoming the norm, and it’s set to become a growing trend in how we spend, send, and save money. People can now use their computers or mobile phone to pay bills, apply for online loans, transfer money, and view their bank statements.

This provides more choices and convenience in higher-income countries. In developing countries, the rise of digitalfinancial services has provided access to financial services to millions of individuals who previously had little or no access to a bank account.

However, with technology evolving at such a rapid pace, one area that can be a concern is mobile banking security. Unscrupulous individuals are out to take advantage of people and businesses who rely on online technologies when performing financial transactions through fraudulent acts, data breaches, and the like.

Introduction to Digital Finance

The term “digital finance” describes the modern approach in the financial services business brought about by new technologies. It encompasses a wide range of tools, applications, procedures, and business models that have redefined the delivery of traditional banking and financial services.

Simply put, digital finance refers to all the financial services offered via mobile phones, personal computers, the internet, or cards that are linked to a robust digital payment system. Even though technological innovation in finance is not new, investment in new technologies has expanded significantly in recent years, and the rate of invention is increasing at an exponential rate.

According to the Journal of Business Economics, digital finance also covers a wide range of innovative financial products, financial businesses, finance-related software, and novel forms of customer communication and interaction — all of which are provided by fintech companies and innovative financial services providers.

In a nutshell, digital finance includes all merchandise, services, technologies, and infrastructures that enable individuals and businesses to access payments, savings, and credit facilities via the internet without having to visit a bank or financial institution in person.

The Development of Digital Finance

The world’s financial systems are a product of the digital revolution. Not only does digital finance apply to the newfound convenience that online customers experience but also to the system as a whole, including how financial institutions operate, how investors calculate risks, how stock exchanges buy and sell shares, and how policymakers make decisions to protect consumers and businesses alike.

Thanks to modern information technology, digital finance is becoming an integral aspect of the business industry. In fact, digital finance – also called fintech or internet finance – is recognized for contributing to China’s financial development, economic growth, and ultimately, poverty reduction.

As per one study, digital finance has the potential to increase financial inclusion by extending financial services to non-financial sectors, allowing individuals to access a wide range of daily services. Because digital finance does not require banks to act as intermediaries between lenders and borrowers, it can reduce transaction costs, considerably improving the economy’s efficiency.

Using Digital Technologies to Manage Personal Finance

When it comes to personal finance, using digital technologies is beneficial in many different ways. For example, if you’ve always wanted to commit to budgeting, now is the opportunity to do so with the help of technology. You might also want to understand how investing works or manage your taxable income while you’re at it.

Regardless of your purpose, it pays to learn about the following strategies for using digital technology in handling your personal finance more efficiently.

1. Budgeting

Sorting through unending quantities of receipts, invoices, and payment slips used to be a part of budgeting. Not so long ago, many consumers were unable to accurately gauge spending, making the endeavor stressful and time-consuming.

Now you can have fun budgeting and organizing expenses like food, rent, mortgage payments, utilities, transportation, insurance, and loan payments even while you’re on the go. With an online budgeting tool at hand, you can rest assured knowing you’ve set aside money for both anticipated and unexpected expenses.

2. Automation

These days, time is precious, and one of the best things technology can do for you is to help you manage your time.

For instance, a vast majority of individuals find direct deposits very convenient. The days of driving to the bank to cash paychecks are long gone. Your employer can simply electronically transfer your salary to your bank account, and you’ll receive it in real-time.

Automation also lets you pay recurring expenses, like your credit card bills, by setting up an automated payment plan. This routine thus enables you to avoid penalties, late fees, or interest rate increases.

Additionally, you can now save a portion of your paycheck automatically each month. Using automation technology, you can save for emergencies in a second high-yield savings account. This technology also enables you to pay your bills, send checks, initiate installment buying, and complete several other financial transactions digitally.

3. Management of investments and pensions

Money management systems are also valuable in assisting you toward putting money aside for the future. Many websites and apps have features that let you monitor and manage your investments and pensions.

You can see whether the stocks you’ve invested in are performing well, how your pension fund is expanding, and whether you can transfer any of your previous pension plans to a new one instantly. If you’re tech-savvy, you could explore several apps with this function whether you’re an iOS or Android user.

4. Networking

The ability to connect with people is perhaps the best benefit of technology. You can learn about others who share your financial goals by joining social media groups, blogs, or other online forums. For example, if you’re attempting to save money, you could join a group of people who use coupons frequently and learn from their experience.

You could also improve your financial awareness by utilizing technology to network with financial experts. Just remember to transact only with certified professionals and be careful to whom you give access to your personal information. Finally, technology can assist you in a variety of ways in improving your financial situation. You could inquire with your bank about availing yourself of relevant financial products that match your financial goals.

5. Centralization

The trend in money management is quickly moving toward apps that allow users to manage their finances from a single platform. With such apps, you can bring together all your bank accounts, credit cards, and investments in one place, so you’ll always know where you are finances-wise. That means you no longer have to check several accounts to ensure you won’t run into a deficit of funds just because you couldn’t keep track of all your bank accounts.

Getting Started on Managing Personal Finances in the Digital Age

Digital technologies are at your disposal, and it’s in your best interest to utilize them to help you achieve your financial stability goals. Here’s what you need to do.

1. Make a financial plan

A financial plan’s entire purpose is to lay everything out in front of you so you can see where everything is going and make some changes if you aren’t currently on track to accomplish your financial goals. For example, setting a budget and sticking to it is the one step that can make virtually all your financial goals attainable. Again, there’s no shortage of budgeting apps you could use to help you budget efficiently.

2. Establish an emergency fund

Setting a goal for how much nest egg you want to build is crucial in creating an emergency fund. It’s a good idea to have at least three months’ worth of living expenses saved up in an emergency account —even better if you can bring that number to six months.

The best method to accomplish this is to open a separate bank account for your emergency fund, making sure you don’t dip into it unless absolutely necessary. At the same time, you want the funds to be readily accessible so consider setting up an online banking account. Be sure to protect your account from bad actors by utilizing security measures like one-time passwords (OTPs) or digital keys.

3. Settle your credit card debt

The average interest rate charged on unsettled credit card balances is a major hurdle to financial stability. As such, prioritizing high-interest debt is one of the best financial strategies. Go online and then check if you qualify for a balance transfer to a new card that can offer better terms. Some credit card companies will offer to waive interest payments for a set amount of time.

4. Borrow wisely

One of the ways to achieve financial stability is to borrow only what you need. Otherwise, you might default on your loans and incur penalties for late payments. When that happens, your credit score will suffer. So, even if you succeed in finding an online loan to tide you over, there’s the risk you won’t get borrower-friendly terms.

Get in the Know

Finance is now digital. The financial services industry recognizes the importance of a comprehensive digital transformation in helping its customers set their financial goals, track their progress, and ultimately become financially stable. On the other end of the spectrum, consumers need to be adept with online financial products and services that they can use to enjoy convenient, transparent, and seamless transactions.

About the Author

Mira Sagrado, Digital Marketing Head of RCBC Bankard.

Mira is the Digital Marketing Head of RCBC Bankard, a Card Servicing entity of Rizal Commercial Banking Corporation (RCBC).  With her passion for turning creative ideas into effective campaigns, she leads the development of all digital marketing programs of RCBC Bankard. Outside work, she expresses her creativity through photography and writing.

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I would like to thank Mira once again for her easy introduction into the digital finance management world! We are all familiar with the tools but sometimes one needs to prioritize on what is essential to our benefit!

If like Mira you wish to collaborate for guest posting or sponsored posts please do not hesitate to reach out by e-mail jon@joneytalks.com and of course, for everyone, do follow us on social media as well for more great content, check our Facebook, Instagram, Twitter, and join our e-mail list. I would love to connect with you!