“The person who doesn’t know where his next dollar is coming from usually doesn’t know where his last dollar went” – which is why money management is necessary. It is especially true for digital money as digitalizing has made financial services so easier that you do not even realize when you are spending way too much money.
What is Digital Money?
For thousands of years, money has been using as a medium of exchange. It has a powerful impact on economic and social development. The form of money has changed several times. There was a time when metal coins were used, then came cash. And now, we are living in the age of digital money.
Digital money, also known as digital currency, in any form a payment that has no physical existence but has an electric form. However, you can turn the money into physical money or cash sometimes.
Digital money is exchanged through electronic medium or systems. Digital money is used with a computer, and is the most widely used digital money is cryptocurrency Bitcoin. Smartphones, credit cards, cryptocurrency exchange – all use digital money.
Importance of Digital Money Management
Many people and companies are doing business cashless as digital money is the future of payment or banking system. They make payments through credit cards or other digital payment systems. 67% of millennials are interested in banks that provide money management tools and services digitally. More people are becoming interested in digital money as the transaction system is faster, cheaper, and also secure.
Digital money allows people to make a transaction without physically going to the bank. You can make payments or make a transaction without even having a bank account or a credit.
Not everyone has a bank account or credit. Some do not have the minimum requirement fulfilled for getting a credit card. Therefore, digital money is a remarkable opportunity for lower-income people or entrepreneurs. It is especially useful for developing countries, as the digital money system costs lower than the traditional banking system.
Digital money increases inclusivity and social cohesion. As a result, more people come under the range of the banking system. Therefore it benefits the economy of the country. The government also benefits from the improved tax collection and the use of digital remittance.
While purchasing something or exchanging money, we have to pay intermediary costs. Profits or other costs get included in these types of transactions. In the digital money system, there is hardly any intermediary costs involved.
Digital money offers opportunities for companies or organizations. They get benefited from revenue growth as the cash handling cost and auditing cost decreases. Apart from that, they get this advantage in both existing and new markets. Efficiency in managing invoices and receipts is increasing.
8 Benefits of Digital Money Management
Surely digital finance has advantages compared to the traditional financial system, which is why digital money management is getting popular day by day. Here are some benefits to it.
The digital money management system is accessible from anywhere. Moreover, the whole system fits in your pocket. Wherever you go, whenever you want, you can access it. You do not have to worry about going to banks, the availability of ATMs, etc.
Everyday tasks become a lot easier to complete through digital money management. You can check your reports whenever you want. It is accessible to you 24/7. There is no restriction in using it. All you need is an internet connection and a device.
You do not have to pile up papers or envelopes to keep track of your financial records. You do not need to wait for simple financial tasks. Sending and receiving invoices gets a lot easier. You do not have to wait for a long time to complete a simple task.
A digital money management system provides ease of use. You do not have to carry a lot of cash when you are going somewhere. You can do everything just by a click or touch. Your payments, receipts, transactional history, everything is on your mobile device and is made within seconds.
· Real-Time Service
In a digital management system, everything is done in real-time. You do not have to waste any time. Traditional banking or any other payment system can take time in waiting in the queue, exchanging money, taking invoices, etc. However, for digital payment, everything is done in seconds, and it happens in real-time.
The digital management system is flexible and allows flexible communication with your accountants. There are also options in choosing in which way you want to communicate with your accountant. You can have face to face conversation through call, chat, or email.
· Decision Making
When all the necessary financial details are available at your hand, you become more confident in making any financial decision. You can take decisions based on numbers and facts and also can plan for the future accordingly, depending on your digital wallet.
The major concern of banking or any other financial system is security. A digital money management system provides security for individuals and companies. The transaction is secure. The latest technology is being developed to make the system more secure. AI and machine learning are used to detect fraud or other suspicious behavior in the digital money management system.
The best part about the digital financial system is that it provides an opportunity for inclusivity. It is cheaper and accessible to most people, even those who live in remote areas. This allows a wide range of people to be a part of digital money management.
Though digital money management is the new way of handling finance, it has some challenges too. Still, it is a new thing to some, and they are not comfortable using it. Security is another concern for many companies or organizations though most of the security issues get resolved in a short time. However, digital finance has developed a lot and still growing. In the future, digital money management might dominate the financial sector.