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How Tech Wearables Give Your Money Management a Boost
Tech such as smartwatches do more than support your physical goals — they can play a key role in personal finance management. Wearable devices can track your spending, pick up on financial trends, and help you set daily, weekly or monthly budgets.
Let’s explore the state of wearable technology and how it is evolving to develop important finance tools. Because wearable devices can sync with apps across a range of devices, they can act as a control panel to access financial information and insights 24/7.
Wearable devices can include smart watches, jewelry, virtual reality (VR) glasses and other types of accessories.
Many of these devices have the same functionality as a smartphone. They have built-in communication capabilities, a range of apps, and have sensors to track things like heart rate, step counts and location.
They are known for supporting fitness and health. However, with the development of new and more sophisticated apps, wearable technology can provide a wide range of functionality, including personal finance management.
Wearable devices can lead to better finances in several key ways. These include mobile payments, the ability to track spending, access to budgeting tools and trend analysis.
Wearable devices allow users to make payments in stores, restaurants, bars and anywhere else that accepts contactless payments. You wouldn’t need to carry around a debit or credit card that you could potentially lose or fumble with your smartphone to open the necessary app. This effectively turns a smartphone, for example, into a digital wallet attached to your wrist.
Wearable devices use near-field communication (NFC) technology to power contactless payments, allowing transactions to be made with a simple tap. Wearable technology offers three main benefits in terms of mobile payments.
Just like on a smartphone, banking apps can work on a wearable device. That allows users to quickly check their spending and receive notifications whenever money leaves their account. It can notify you immediately if an unexpected or fraudulent payment takes place — and you can jump into action.
Finance apps like Revolut make it easier than ever to manage your spending and set budgets, which can help save money over time.
Users can set individual budgets for things like groceries, online shopping or anything else they aim to pinch pennies on. The app will then send notifications if you are close to hitting your budget limit, preventing overspending.’
Finance apps installed on your smartwatch or other wearable device can also identify trends and generate analytical reports. These insights allow users to make decisions that help them save money and avoid spending too much.
For example, the apps may tell you that you are spending an excessive amount of money on coffee, or that the cost of going out to eat several times a week is not sustainable. This allows people to make lifestyle adjustments that will prove beneficial in the long run.
Artificial intelligence (AI) plays a significant role in providing innovative features within wearables and finance applications. AI algorithms analyze financial data such as spending habits and monthly income/expenditure. This provides personalized insights and suggestions for better money management.
These algorithms help power functionality such as:
Such features can prove invaluable for people across the U.S., where the average FICO credit score is only 716. There are several reasons why this is the case, but not-so-hot personal finance management is one of the main culprits. It also stems from other issues — a lack of accessible, easy-to-use financial management tools. And that’s where tech wearables come in.
Privacy and security remain the most obvious hurdles for wearable devices and finance management, especially in terms of data collection and its misuse. This is because large amounts of personal data need to be processed for mobile payments and money management features to work. Meanwhile, always-on functionality creates a sense of constant monitoring, which not everyone is comfortable with.
The skepticism isn’t going away anytime soon, as the population becomes increasingly more concerned about identity theft and online fraud. These manufacturers potentially have access to everything from browsing data history to information regarding a person’s investments or offshore banking accounts. This means a data breach could be disastrous.
Also, some applications only are designed for Android and others for Apple, while some may be reliant on a Bluetooth connection.
When most people think of wearable technology, they think of fitness tracking and health monitoring. However, this is just the tip of the iceberg. One key use of wearable devices is personal finance management, supported by secure, AI-powered apps.
These apps can allow users to make payments, assist them in budgeting, track and analyze spending and more. Although privacy and security remain an issue for some, data protection and cybersecurity have come a long way.
New York contributor Kiara Taylor specializes in financial literacy and financial technology subjects. She is a corporate financial analyst.
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