I Asked ChatGPT What I Should Never Do With My Money
Written by
Catherine Collins
Edited by
Zuri Anderson
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After being a financial writer for over 15 years and interviewing countless financial planners, authors and entrepreneurs, I was curious to see what type of financial advice artificial intelligence would produce.
After all, many people might use a tool like ChatGPT to ask for money advice, because money is still a taboo topic. So, I wondered if ChatGPT would give sound advice or if it would lead someone in the wrong direction. As a disclaimer, people should get financial advice, particularly investment advice, from a certified financial planner (CFP) rather than artificial intelligence, as ChatGPT cannot guarantee accuracy.
Still, I was surprised by the quality of advice that ChatGPT provided. I specifically prompted it to tell me the biggest money moves someone should never make. I asked it to reveal what types of financial habits or actions people typically do that could jeopardize their financial health. Here is the response I got.
Living Without an Emergency Fund
This is the very first tip that ChatGPT offered when I asked it to list the things people do that jeopardize their financial health. That’s because, it explained, one unexpected expense could create credit card debt. AI recommended having three to six months of expenses in an emergency fund, which is in line with what many financial experts recommend.
Carrying High-Interest Credit Card Debt
Next, Chat GPT explained that having high-interest credit card debt jeopardizes your finances because “20%+ APR compounds against you.” Again, this is advice that many financial experts offer. AI even recommended choosing a payoff plan or considering a 0% balance transfer offer to minimize the amount of money you pay towards interest.
Buying a House or a Car That You Can Afford
The next tip ChatGPT suggested is not buying a house or a car you can’t afford. The reason is that large payments make it difficult to create cash flow for investing. The AI recommended keeping total housing costs below 28% of gross income and car payments below 20% of annual take-home pay. It is also recommended to pay off a car within three to four years.
Of course, there are many opinions about the best way to purchase cars. Some financial experts, such as Dave Ramsey, recommend buying cars in cash, while an article at Capital One suggests that it depends on your attitude towards debt, the interest rate and your personal priorities.
Other Pieces of Advice
Some other pieces of advice that ChatGPT gave included recommending that people avoid investing without diversification, trying to time the market, drawing from retirement accounts early, not getting an employer match, and not having the right insurance. It also cautioned against poorly managing taxes, paying high fees, and using payday loans or buy now pay later products.
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