As of 2024, there are over 270 million online shoppers in the United States alone, which is more than 81% of the total U.S. population. E-commerce revenue has reached $1,137 billion with mobile shopping expected to reach $199.50 million by 2028.
This number has been steadily increasing over the years, as more systems, such as banking, streaming services, and online gaming, for example, are being digitized.
As our daily needs and habits have shifted to transacting online, managing and tracking expenses has become a little complex. This is where artificial intelligence (AI) solutions can assist. Several AI applications and software offer innovative solutions that can help individuals and businesses manage online expenses and spending effectively.
From tailoring customized budgets to tracking every receipt, AI can help us balance and maintain our digital checkbook. How exactly can AI help manage our expenses?
Automated Expense Tracking and Categorization
One of the many ways AI can assist is by controlling online expenditure using automated data and categorization. These AI-powered tools can automatically extract transaction details from digital receipts and online purchase confirmations.
It then categorizes expenses into predefined or custom categories, providing you with a much clearer overview of your online spending habits. By eliminating manual data entry, AI can reduce any errors and can save time in tracking online purchases.
For businesses with very specific needs, AI can provide tailored solutions that streamline your business operations. For example, if you run a delivery service or own a fleet of cars, AI can track and automate the mileage for expense reporting.
Using GPS features, AI software, or apps can simplify the mileage logging process allowing for a more efficient documentation process that does not require manual entry.
Similarly, if you monetize your gaming, AI can provide detailed breakdowns of your incoming revenue and expenses related to different gaming platforms or even specific games. This provides you with detailed insights into which activities impact your budget the most.
Smart Budgeting
Gone are the days when spreadsheets were a way to set monthly budgets and attempt to stick to them. AI can create and manage budgets for online spending. Some AI tools can analyze past spending patterns and suggest personalized budgets for different online expenses.
For example, if you typically spend $50 a month on streaming services, then AI can set an entertainment budget. Let’s say you frequently play at Bitcoin casinos, AI can help you set a budget in relevant crypto coins, keep track of your expenses, and help you manage your winnings, helping you grow your savings.
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AI tools can adapt to any changes in your financial situation. If you start spending more on groceries and less on food deliveries, it might suggest adjusting your budget accordingly. This flexible approach can help you stay on top of your finances without feeling restricted by fixed budget categories.
Integration with Financial Platforms
Many AI-powered expense management tools have the ability to integrate with other financial exercises, such as connecting with online banking platforms and accounting software. This integration can provide you with a comprehensive view of your financial well-being.
For example, when you connect your online banking platforms, these AI systems can automatically import and categorize transactions from your savings and checking accounts. It can help reduce the risk of overlooking certain transactions that could be helpful for tax reporting purposes.
The integration with accounting software is especially beneficial for businesses. Transactions can automatically be categorized and assigned to a certain project or client while updating your financial records in real-time. This seamless flow of information ensures your books remain up-to-date, simplifying tax preparation and financial reporting.
Integration with Payment Cards
AI systems can integrate with various types of payment cards, including virtual cards and physical direct debit cards. Virtual cards generate unique card numbers for each transaction (tokenization).
This adds an extra layer of security to your online purchases. When you use your virtual card for an online subscription, AI can track the recurring charge, categorize it appropriately, and alert you to any unexpected changes to the billing amount.
Physical debit cards linked to your expense management systems offer similar benefits for in-person purchases/ For instance, if you are buying gaming equipment from a gaming store, the transaction is automatically captured and categorized.
This level of integration ensures accuracy across all your spending channels, whether it is online purchases or in physical stores. This helps you better maintain control over your finances and budgets.
Paperless Solutions and Digital Documentation
Several AI expense management solutions promote paperless transactions, shifting from traditional receipt storage methods to digitized documentation systems.
This allows you to upload and store your receipts electronically, reducing the paper clutter and simplifying your home or business paper trails. Any receipts you need can easily be retrieved, making it so much easier to search for or analyze any past expenses.
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Fraud Detection and Prevention
Most AI solutions use AI algorithms that can detect any unusual patterns, making them invaluable in protecting against any fraudulent activities. These systems can analyze your transaction data and alert you to any suspicious activities. Benefits of using AI solutions include:
- Quick detection of any fraudulent activities.
- Immediate notifications or alerts to your mobile device of any suspicious activities.
- Overall strengthening of online financial security.
Challenges and Considerations When Using AI Finance Tools
While AI offers several benefits for controlling and managing online expenses, it does have potential challenges you need to be aware of. Privacy concerns regarding the collection and analysis of your personal financial data are a little concerning and can be an issue.
There’s also a need for accurately setting up the software and the ongoing maintenance such as regular updates and security patches to ensure AI tools function correctly. It’s so vital to maintain personal judgment in financial decisions instead of completely relying entirely on AI recommendations.
Features to Consider
- Look for AI apps or software that has a user-friendly interface, allowing you to log expenses quickly using a mobile app or website.
- For business, consider apps or software solutions with OCR features to extract information from receipts by taking a simple photo.
- Consider a solution that provides financial insights on spending habits and suggestions on ways to save.
- For business, look for multi-currency support, integration with accounting software, and project and client billing solutions.
