New tools spring up constantly for consumers looking to improve their personal financial health and financial knowledge. There are apps for helping people understand their credit and how to improve it, there are websites dedicated to helping people understand where their money is going and how to budget it better, and there are ways to use AI to automatically help users save money for a summer vacation to retirement.
Utilizing apps for financial health is having an impact, too. According to Forbes, a 2012 study by the National Endowment for Financial Education and George Washington University found that nearly 70% of young people believe they’re financially literate - but that does not mean they are.
The same article states that while 70% of young people may feel they are financially literate, only 8% actually are. But financial tools and apps are helping. The Forbes article also outlines that companies who make financial apps are helping empower young people, specifically Millennials, about their finances so money is less frightening and less scary to talk about--true financial empowerment comes from being able and willing to have real conversations about financial wealth and well-being.
As these new tools spring up, people are becoming increasingly empowered about their financial well-being and are starting to expect the same knowledge and empowerment with homeownership. Old-fashioned rules of thumb don’t cut it anymore--people want detailed data about their home and how it factors into their overall wealth and how it integrates into their personal portfolio.
According to the Consumer Financial Protection Bureau (CFPB), a person’s financial well-being comes from their sense of financial security and freedom of choice - both present and future. Various influences for this well-being include savings and safety nets, income and employment, past financial experiences, and financial behaviors, skills and attitudes.
A home is usually the largest investment and asset a person will own during their lifetime, and it plays a huge role in understanding one’s financial well-being. While homeowners may want to factor in their house into their total net worth, it is not as simple as adding the house value into a spreadsheet and calling it an asset. According to U.S. News, when factoring a home’s value into one’s net worth, you have to factor in replacement housing, selling, equity and the mortgage.
Considering there are apps specifically designed to alert users that they’ve spent too much money at places like their favorite coffee shop this month, and considering this kind of information is marketed as a key component to improving financial health and knowledge, it is only logical that similar technology may be used for understanding how much of an asset a person’s home really is, and more importantly, what kind of variables may impact its total value and what kind of factors may impact that value.
The Personal Finance Employee Education Fund (PFEEF) claims that a survey by InvestmentNews shows that 78% of financial advisers strongly agree that financial literacy is a nationwide concern. According to the same article, a “literate” consumer is going to make better financial decisions when it comes to borrowing, saving, and purchasing financial products. By offering financial tools like Homebot tools to clients, real estate agents give their clients an advantage.
As technology continues to evolve, consumers will continue to expect more from it. It’s our job as technology providers to empower consumers to have smarter financial conversations and be an advisor in building personal wealth.