You don’t need artificial intelligence to tell you that you should try to save more money — but AI might be able to help you actually do it.
ChatGPT — the natural language processing AI chatbot that both people and machines can’t stop talking about — can be a valuable tool in a quest to keep more of the money you earn.
It Can Buy You a Free Financial Education
The more you know about personal finance, the better you’ll be at saving money. You can find answers to most of your financial questions online, but it’s easy to get lost in the weeds and confused by conflicting information in internet rabbit holes.
But ChatGPT excels at quickly condensing expansive concepts into digestible chunks.
“ChatGPT can answer questions on personal finance, such as understanding credit scores, managing debt, optimizing tax strategies, and finding ways to reduce expenses,” said Kami Adams, a financial advisor and founder of Creative Legacy Group. “It can empower users with relevant information to make better financial choices.”
All You Need To Get Started Is a Question
Take this example question: “Should I put my emergency savings in an investment account?”
In a few seconds, ChatGPT responded that investments have the potential for greater returns but carry more risk. It then outlined the following points to consider before you decide, each with a few sentences on why it matters:
- Purpose of emergency savings
- Risk tolerance
- Time horizon
- Your financial situation
It concluded with this:
“It’s generally recommended to maintain a separate, easily accessible emergency fund in a liquid and low-risk account, such as a savings account or a money market fund. This ensures that you have quick access to funds when unexpected expenses arise. If you have additional savings beyond your emergency fund and you’re willing to take on some risk, you can consider investing those funds based on your financial goals, risk tolerance, and time horizon. Consulting with a financial advisor can also provide personalized guidance based on your specific circumstances.”
While an AI-generated response isn’t gospel, the results provide a solid grasp of the subject and a good starting point for more granular research — and you could get the same results for any subject.
It Can Help You Plan To Save More and Spend Less
ChatGPT can help you save money and spend it more wisely by assisting you in curating an individualized budget.
“ChatGPT helps me to create and manage budgets, track expenses, and provide insights into spending patterns,” Adams said. “It enables users to make more informed decisions and identify areas where savings can be made.”
On May 4, a Twitter user shared a ChatGPT session he created in less than three minutes. He started by typing, “Explain budgeting the way a certified financial planner would.”
The platform responded in a professional tone with a synopsis of why budgeting is fundamental, explained what a budget is and then laid out a concise but comprehensive seven-step plan for creating one.
The user then submitted the following queries:
- “Now explain the concept of ‘pay yourself first'”
- “Give a detailed thorough comparison of budgeting vs. pay yourself first”
The result was a well-rounded, well-written action plan tailored to the user’s specific financial points of interest. He could have found the information online, but not condensed, not custom-made, not in the same place and certainly not in under three minutes.
It Can Crunch Your Numbers and Outline a Strategy
If you feed ChatGPT information about your income, expenses, goals and timeline, it can provide guidance on how to reduce spending, build savings, pay down debt or create a retirement plan.
“AI algorithms can analyze financial data and provide personalized recommendations for optimizing savings and investments,” Adams said.
The platform can’t recommend investments, but it can steer you in the right direction.
“ChatGPT can guide individuals in choosing appropriate investment strategies based on their goals, risk tolerance, and time horizon,” Adams said.
According to Upstart, the more precise and comprehensive the information you give, the more accurate and personal the results will be, just like with a human financial planner.
It’s a Tool, Not a Magic Pill
ChatGPT is a remarkable tool that you can use on your journey to greater savings and healthier finances, but its data bank currently contains information only up to September 2021.
“ChatGPT does not have real-time data,” said Paul Walker, author of “A Money Book Anyone Can Read.” “So asking a simple question such as which bank offers free checking or where to get the cheapest gas will not work.”
ChatGPT is undeniably useful, but it can’t help you compare prices or shop for discounts, it’s not infallible and it’s not a replacement for thorough research, professional advice or a strategy based on the fundamentals.
“The basics of finances have remained the same since the creation of money — diversify your assets, consider your timeline, etc.,” Walker said. “Trying to use AI to beat the market will always fail in the long run.”
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