You don’t need artificial intelligence to tell you that you should try to save more money, but AI could help you do that.
ChatGPT – the natural language processing AI chatbot that people and machines can’t help but talk about – can be a valuable tool in a quest to keep more of the money you earn.
GOBankingRates spoke to a financial planner who described what ChatGPT can do to help you save money – and a financial author who described what it can’t.
He can buy you free financial education
The more you know about personal finance, the better you will be able to save 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 down rabbit holes on the internet.
But ChatGPT excels at quickly condensing expansive concepts into digestible chunks.
“ChatGPT can answer questions about personal finances, such as understanding credit scores, managing debt, optimizing tax strategies, and finding ways to cut expenses,” said Kami Adams, advisor financier and founder of Creative Legacy Group. “It can give users relevant information to make better financial choices.”
All you need to get started is a question
Take this sample question: “Should I put my emergency savings in an investment account?”
Within seconds, ChatGPT replied that investments have the potential for higher returns but carry more risk. He then went on to outline the following points to consider before you decide, each with a few sentences explaining why it’s important:
- Purpose of emergency savings
- Risk tolerance
- Temporary horizon
- Diversification
- Your financial situation
It ended with this:
“It’s generally a good idea to maintain a separate, easily accessible emergency fund in a liquid, low-risk account, such as a savings account or money market fund. This ensures that you have quick access to funds when unexpected expenses arise. If you have extra savings beyond your emergency fund and are willing to take some risk, you may want to consider investing these funds based on your financial goals, risk tolerance and time horizon. . Consulting a financial advisor can also provide you with personalized advice based on your particular situation.
While an AI-generated answer isn’t gospel, the results provide a solid understanding of the topic and a good starting point for more granular research — and you could get the same results for any topic. .
Find out: Here’s how much money the experts say you should have in your savings account if you’re in your 50s
It can help you plan to save more and spend less
ChatGPT can help you save money and spend it more wisely by helping you build a personalized budget.
“ChatGPT helps me create and manage budgets, track expenses, and provide insight into spending habits,” Adams said. “It allows 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 like a certified financial planner would.”
The platform responded in a professional tone with a summary of why budgeting is fundamental, explained what a budget is, and then presented a concise yet comprehensive seven-step plan for creating one.
The user then submitted the following requests:
- “Now explain the concept of ‘pay yourself first'”
- “Give a detailed and in-depth comparison of budgeting versus paying you first”
The result was a well-rounded and well-drafted action plan tailored to the user’s specific financial interests. He could have found the information online, but not condensed, not custom-made, not in one place, and certainly not in less than three minutes.
He can analyze your figures and define a strategy
If you feed ChatGPT information about your income, expenses, goals, and schedule, it can provide advice on how to cut expenses, build savings, pay off debt, or create a retirement plan.
“AI algorithms can analyze financial data and provide personalized recommendations to optimize savings and investments,” Adams said.
The platform cannot recommend investments, but it can point 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 accurate and complete the information you provide, 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 great tool you can use on your journey to greater savings and healthier finances, but its database currently only contains information up to September 2021.
“ChatGPT doesn’t have real-time data,” said Paul Walker, author of “A Money Book Everyone Can Read.” “So asking a simple question like which bank offers free verification or where to find the cheapest gasoline won’t work.”
ChatGPT is undeniably useful, but it can’t help you compare prices or buy discounts, it’s not foolproof, and it’s not a substitute for thorough research, professional advice, or a fundamentals-based strategy.
“The basics of finance have remained the same since money was created – diversify your assets, consider your time frame, etc.,” Walker said. “Trying to use AI to beat the market will always fail in the long run.”
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