The era of the online world has changed how people communicate, how we find and receive information, and how we live our lives. Specifically, the internet and technology have changed how people shop and manage their finances. You can look at just about any personal finance blog to see how technology has changed our relationship with money.
If we look back at how money was managed ten, twenty, and surprisingly fifty years ago and look at it in comparison to the way that people manage their finances today, there are some clear conclusions.
For one, people today have substantially more control and access to taking care of their own money. Also, arising financial trends sway the economy, how consumers invest their money and time, and how companies conduct their business.
Keep reading to learn more about the top money trends of the 21st century, including how money, shopping, and banking, have changed over the years thanks to the evolution of technology.
Read More: 5 Money Management Mistakes You Should Avoid
The Evolution Of Personal Finance
Personal finance has seen massive changes over the past century. Technology has allowed consumers to save an enormous amount of money and time since everything is accessible to them through a simple tap of a screen or click of a mouse. It has also bestowed a feeling of power over how to financially plan and save, spend money, and pay for bills.
We can likely expect that finance will probably see consistent changes in the future because of advanced developments and innovative technology, for example, new online services, new software programs, and efficiencies that will make dealing with our finances more convenient, practical, and most importantly, manageable.
Over time, we, according to the evolution of technology, have moved into a more cashless society. We have seen going to the bank turn into quick trips to the nearest ATM, to the present time where a lot of our transactions can be accomplished using our gadgets. To some degree, the need for physical money has become unimportant, and through the COVID-19 Pandemic, physical money has been strongly discouraged.
This has directly affected how we spend and use money. A quick tap of your card or gadget and you’ve bought your morning espresso, or maybe you even pre-ordered your espresso via an app, so it was waiting for you when you arrived at the cafe.
Before COVID-19, the Reserve Bank of Australia led a study that upheld that physical money is being used less. However, it found that some people prefer using physical cash, especially the elderly, those with limited access to the internet, and those from lower-income households. That said, post COVID-19, it is to be expected that the money trend will intensify, even into those groups that have been, beforehand, resistant to the change as the goal health crisis has been a catalyst for structural changes. As per the RBA, since 2007, physical money has diminished from being used in almost 75 percent of exchanges down to roughly 30 percent in 2019.
Our Spending Habits
We currently no longer have to leave our homes to spend our hard-earned money. Nearly everything is now purchasable online, enabling you to quickly compare prices and have your purchase order show up right at your door.
New payment methods have been created in the ascent of but now pay later (BNPL), testing and switching the customary idea of lay-buy. BNPL alternatives like Zip Pay and After Pay permit you to receive your item immediately and pay it off after some time, either with or without interest-free periods.
The essential advantage here is time efficiency. These technological advancements have had a far-reaching influence and affected the way we value and perceive money.
How We Value Money
When money is in its physical forms, like coins and notes, we often place a higher value on the same amount of money than we would during a card-based or electronic transaction. For instance, you might find it challenging to go through $100 if given to you in notes, as you would be very aware of every cent you spent on that transaction. However, in comparison, you might tap away $100 on your card without even flinching or thinking about it too much.
More so with the younger generations, BNPL additionally adds to the allurement of impulsive buying. Knowing that you can buy something now for $80 but only have to pay $20 upfront. Eventually, it can give you a false sense of the value of the item, and you might find yourself purchasing things you usually wouldn’t purchase or overspending.
There are likewise unique behavioral instincts around money, which can become more challenging to manage in a cashless society depending on your money type. For instance, if you’re someone who spends a lot of money or gambles frequently, you might want to consider using physical money to help you to remember the amount you are spending.