How reinforcement learning can drive personalized financial wellness

Pandey, Varun and Awasthi, Varun (2025) How reinforcement learning can drive personalized financial wellness. International Journal of Science and Research Archive, 15 (1). pp. 1567-1583. ISSN 2582-8185

Financial wellness is a pervasive challenge: many individuals struggle with saving, investing, and budgeting effectively. Traditional budgeting tools and Robo-advisors often provide generic advice, failing to account for an individual’s unique behavior and needs. This paper proposes a novel approach that integrates reinforcement learning (RL), behavioral analytics, and natural language processing to deliver real-time, personalized financial recommendations. We formulate personal finance management as a Markov Decision Process, using a Deep Q-Network (DQN) to learn optimal actions (such as saving or investment allocations) tailored to a user’s financial state. To incorporate user diversity, we apply unsupervised clustering (K-Means) on behavioral data to create distinct user personas, enabling the RL agent to adapt its strategy for different profiles. An interactive conversational agent powered by OpenAI’s GPT API serves as the user interface, translating the RL agent’s outputs into natural dialogue and handling user queries. We present an end-to-end implementation in Python, including synthetic data generation, persona clustering, RL training, and integration with OpenAI’s language model. Experimental results on a simulated personal finance environment demonstrate that the RL agent learns policies that significantly improve saving and investment outcomes compared to baseline strategies. The conversational interface provides personalized coaching, which can boost user engagement and trust. This interdisciplinary framework—combining RL for decision-making, clustering for personalization, and NLP for interaction—illustrates a promising direction for intelligent financial advisors that learn and communicate adaptively, ultimately empowering users to achieve better financial wellness.