While technology has given us more control over our financial lives — online shopping, online banking, mobile payments, automatic deposits — it may also be changing how we view and value money.

Growing evidence suggests technology is affecting financial decision-making, and when coupled with deep-rooted financial attitudes and behavioral biases, there can be some real negative consequences.

These biases — combined with emotion — can drive investors to make bad financial decisions, says Angie O'Leary, head of wealth planning for RBC Wealth Management-U.S. in Minneapolis. People's social media networks, for example, may influence irrational behaviors, their need for instant gratification and an over-reliance on inaccurate information, she says.

On the other hand, technology can be a friend. Mobile apps help people better track their finances and help them overcome behavioral biases, such as overconfidence on limited information or an aversion to losses, O'Leary says.

Psychologists Daniel Kahneman and Amos Tversky pioneered research in behavioral finance in the 1970s, and found investors tend to shy away from uncertainty and make decisions based on incomplete information or irrational thought.

People's financial attitudes and resulting financial behaviors, such as budgeting or impulse shopping, tend to start in childhood. Lessons over time from other influences, such as school and social media, further shape attitudes towards money.

O'Leary says taking the emotion out of your finances should be the top goal in making better decisions. The best way to do that is to create a financial plan, which helps set budget, savings and spending goals, taking into consideration financial risks and future life events, to help investors stay on track toward their short- and long-term financial goals.

While technology may help us make more informed financial decisions, “having a trusted advisor is still an important part of helping clients be aware of their biases and understand when their emotions kick in," says O'Leary, who leads a team focused on goals-based planning, which identifies, tracks the probability of success, and figures out how to fund investors' goals.

Technology as a negative financial influencer

Today's digital world often means people have a broader network of potential social influences than ever before. But are those influences positive or negative?

Alan Wolberg, a senior wealth planner with City National Bank, says technology may be having a negative effect on financial decisions.

Some of the ways that technology is negatively influencing financial decisions are:

  • Social media tribalism: People tend to gravitate toward and identify with information that agrees with their belief system, Wolberg says. This, in turn, affects their financial behavior.
  • Relying on social media or blogs for stock tips: Information gleaned this way may be unreliable and lead to a bad investment, O'Leary says.
  • The ease of e-commerce (free shipping, free returns) plus artificial intelligence-based systems that suggest other products “you might like" may drive people toward more impulse spending for that instant gratification, O'Leary says.

Technology and the value of money

The increased amount of electronic payments carries positive and negative influences. For example, Wolberg and O'Leary think this shift is changing how people value money. The more removed people become from their money, the less they may think about how much they're spending and saving.

Wolberg compares it to how casinos exchange money for chips: “The reason you gamble with plastic chips at a casino — and not cash — is, it becomes less real," encouraging people to spend more, he says. “The more tech we go, the less people value currency."

O'Leary, who has been studying the cashless, technology-driven environment, has concerns, too.

“If transactions are just a flash on your smart phone, and we're not handing over cash in exchange, the risk is: how will we be able to measure the value of a latte?" she says. “It's already becoming an issue."

More than half of Americans (57 percent) have less than $1,000 in a savings account and more than a third have nothing saved, according to a GoBankingRates survey.

“Generally, people are not getting better at saving through technology; they're getting better at spending," Wolberg says.

Technology as a positive investment influencer

On the positive side, electronic payment apps, such as Zelle and Venmo, have made transactions easier and faster

Here are some other ways technology has simplified investors' financial lives:

  • Automatic payroll enrollment in 401(k) retirement accounts has helped combat people's tendency to procrastinate about saving for the future and their inertia regarding investment decisions. In fact, it's significantly increased 401(k) participation.
  • Many websites and apps are available to help people create budgets, track their spending and save money. Budgeting apps, in particular, may help people overcome the “overconfidence" bias that causes them to act on easy-to-access information, such as the past performance of stocks, and ignore other data.
  • Some technology goes further by trying to change people's behavior. Yale professors developed stickK, a savings app where users set goals and face social pressure if they fall short, such as a $5 payment to a friend or charity. The app aims to overcome the “loss aversion" bias, which causes people to make irrational decisions because they feel the pain of a loss much more than they feel the pleasure of a similar-sized gain. O'Leary says a person may prefer not losing an existing $100, rather than investing to gain $100.

In general, technology may make it “easier to see where you stand financially," O'Leary says. “Your bank or budgeting app shows you right away; you don't have to wait for a paper statement."

RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.

We want to talk about your financial future.

Investment and insurance products offered through RBC Wealth Management are not insured by the FDIC or any other federal government agency, are not deposits or other obligations of, or guaranteed by, a bank or any bank affiliate, and are subject to investment risks, including possible loss of the principal amount invested.