How The Internet Changed Personal Finance

I think it’s pretty clear that the Internet has permanently altered the way we exist.

Our ability to inter-connect and have instant access to a wide range of information is instrumental to the current development of a global economy and the ushering in of the information age.

Of particular interest to me are the various ways in which the Internet has changed the way we interact with our money.

Consider this incomplete list of four examples:

Online Banking

Prior to online banking, and now – mobile banking, we only had a few limited options for interacting with the bank on-demand. One was stopping by a local branch, and the other was calling in.

Prior to the invention of automated phone systems (run by computers), most of our banking information was simply unavailable during non-business hours.

That’s no longer the case. We now have on-demand access to years of detailed baking information, including transactions and reports. We can also initiate instant transfers between accounts.

The evolution of online bill payment has all but eliminated the need for most check-writing. Most banks will now even let you send payments to individuals via bill pay.

Customer service via email (and now – live chat) is usually available 24 hours a day and can assist with almost any issue that previously required an in-person visit.

The end result is more real-time control over our money.

Investing and Stocks

The Internet was pretty instrumental in ushering in the era of the ‘commoner’ as a stock trader. Online discount brokers pioneered the concept that stock trading could be affordable, accessible, and easy to do.

For the first time in history, people could log on from home and find detailed information on their favorite companies, browse stock lists, and determine their best investment options.

They could then place trades and buy stocks in those companies for $10 or $15, which was unheard of at the time. The Internet made the connection to the stock exchange possible and popularized investing as a means of wealth creation for the middle class.

Widely Available Financial Education

This blog is a great example of the power of the Internet as a means of learning more about money. But blogging as it exists today hasn’t been around for very long.

Even prior to blogging, the Internet enabled the free exchange of information and knowledge between individuals and experts.

Books, newspapers, and television were no longer the primary sources of information. The Internet, and then the search engine, enabled anyone with a question or concern about money to find instant guidance and advice on the best course of action.

As a result, financial education was able to spread quickly. Blogs now enable another form of learning – financial discussion. Through the use of social media and community input, the best financial ideas are given the spotlight.

Increased Competition

Another interesting phenomenon that took place quietly as the Internet developed was an increase in price and product competition.

As online commerce developed, so did businesses sporting low overhead and fast service, creating a great deal of competition for existing brick-and-mortar commerce.

Businesses found themselves pinned against comparison shoppers with a wealth of price and quality information at their fingertips.

The same phenomenon played out in the world of banking, as online banks featured unheard-of interest rates on savings accounts and money began to slowly shift around.

The end result for the consumer were lower prices, better products, and more information on which to base our purchasing decisions.

More to Come…

These are just four simple examples of how the Internet changed our lives when it comes to money management.

This is far from a complete list, and as the global exchange of information and our technological capabilities continue to expand – so will the effects on how we handle personal finance.