If you haven't asked ChatGPT for financial advice, you're in the minority. According to a riveting survey by The Ascent, 54% of American adults have.
But ChatGPT isn't a god. It doesn't have all the answers, and even when it does, it hallucinates -- not that the cute bot will tell you that. Unless you pay $20/month, the bot is limited to pre-2022 information and can't browse the web.
Let's experiment. I'll ask for financial advice from GPT-3.5 (free version) and GPT-4 (paid version). We'll check out the answers, and you can decide if it's worth asking the fastest-growing AI chatbot on the planet how to manage your money.
How it works
How does ChatGPT work? It's like texting. You open a chat and message the bot, and it replies. You can enter statements or questions. If you follow up, the bot will remember your previous responses. To test ChatGPT's internal logic, we won't enable web browsing on the paid version.
We'll stick to asking one question per topic.
If you have a paid ChatGPT account, click the links below to continue my conversations with the bot. Or, copy the prompts and paste them into the free version to start your own conversation.
Hot tip: You can talk to ChatGPT by heading to the OpenAI website and logging in with your Google account. (I recommend trying it out, since AI will transform jobs over the next decade.)
Financial topics
Below are prompts asking ChatGPT for advice on budgeting, investing, and more.
1. Budgeting
Prompt: You are BudgetGPT, a budgeting expert. I'm looking for advice on how to budget. My income is $50,000. I have $10,000 in debt. How should I be budgeting my money?
For more information, you can continue the conversation with ChatGPT.
Overall, GPT-3.5 was accurate but overwhelming. GPT-4 immediately offered a handy starter template I could copy and paste into my favorite budgeting app. The paid version of ChatGPT provided advice that was specific, helpful, and consistent with budgeting best practices.
2. Investing
Prompt: You are InvestGPT, an investing expert. I'm looking for advice on how to invest for the long term. I have $10,000 to invest right now. I want my investments to be recession-proof. How should I be investing my money?
For more information, you can continue the conversation with ChatGPT.
Overall, both versions of ChatGPT responded to my request with conservative investment advice. A beginner might find GPT-4's sample portfolio helpful as a starting point. Notably, both specified that no investment is genuinely 100% recession-proof.
3. Reading
Prompt: I'm a beginner at managing money. Suggest popular books on topics like investing and savings. Stick to recent Amazon bestsellers.
For more information, you can continue the conversation with ChatGPT.
Overall, results were mixed. Both versions recommended older books like The Total Money Makeover: A Proven Plan for Financial Fitness, published in 2009. The paid version provided insight into how I might find the books helpful, which I enjoyed.
4. Saving
Prompt: You are SavingsGPT, an expert on saving money. I want to save up $10,000 by the end of this year. List three popular savings challenges and how to go about them.
Overall, the advice was okay. All challenges would help me hit my $10,000 goal. Some were more realistic than others. I won't save $10,000 a year with the $5 Challenge. Nor do I habitually pay with cash -- these days, I prefer payment apps like Apple Pay.
For more information, you can continue the conversation with ChatGPT.
Does ChatGPT give useful financial advice?
Yes, to a point. ChatGPT mostly followed instructions and accounted for details I provided, such as my income and savings goals. The paid version provided useful templates I could follow for budgeting and investing, which I didn't ask for, but appreciated.
However, the bot has some big limitations:
- Context. The bot is limited to the information you provide. Forget to tell ChatGPT something relevant? Oh, well. The bot probably won't correct your oversight.
- Web browsing. The bot doesn't offer web browsing unless you pay for the $20/month subscription. Information is limited to what it scraped from the pre-2022 internet.
Context
Context really matters. For example, I didn't tell ChatGPT my age or risk tolerance, so it didn't consider those when suggesting an investment portfolio. A good financial advisor would have asked me more about my risk tolerance before making suggestions.
The more you know about a topic, the more relevant context you can provide, and the better questions you can ask ChatGPT -- leading to more satisfying answers.
Web browsing
I didn't bother asking ChatGPT to compare financial products. There was no point. It would need access to web browsing for up-to-date information -- and anyway, Bing AI is better than ChatGPT at browsing the web.
ChatGPT is a black box, but web browsing allows you to track where chatbots like ChatGPT are pulling their financial advice. Super useful for weeding out hallucinations.
Best results
Double-check financial advice given by ChatGPT. Feel free to consult a financial advisor. But bare minimum, verify results with a quick Google search. Language models like ChatGPT draw upon humanity's collective knowledge, and as we know, humans are fallible.
But is the bot useful? Absolutely. Just like we can learn from strangers on the internet, we can learn from AI like ChatGPT by incorporating digital best practices we already use, like Googling new information to ensure it's not ridiculous.
TL;DR: ChatGPT offers a good starting point for boosting financial literacy. It can draft plans and provide actionable advice. Ask it for a starting point, then verify claims you're unsure about. Provide context, and tweak advice to meet your financial needs for best results.
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