Can AI Help With Your Finances?

48 4 minutes read

Like it or not, artificial intelligence is becoming increasingly embedded in our daily lives — including how we manage our money.

From budgeting apps that offer personalized tips for reducing expenses to bank chatbots that deliver account details 24/7, a growing number of companies are incorporating AI into their financial tools and services. At the same time, many people are using conversational chatbot platforms, such as ChatGPT and Claude, for guidance on everything from rolling over a 401(k) to maximizing the benefits of a health savings account.

When used with care, AI can help us make better financial decisions. But it can also provide misleading and false information, as well as empower criminals to create sophisticated scams.

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And right now, AI remains largely unregulated. A recent Pew Research Center survey found that 55% of U.S. adults and 57% of AI experts want more control over how AI is used in their lives.

So it pays to be vigilant to protect yourself while using AI — especially when you’re using generative AI platforms such as ChatGPT and Claude that are powered by large language models. (LLMs, which are “trained” on data from a wide range of sources — such as website content, news articles and academic papers — can understand context and respond in a relevant, human-like manner.)

“New legislation will ultimately have to be introduced to protect consumers as we interact with these LLMs,” says Andrew Lo, a professor of finance and the director of the laboratory for financial engineering at the MIT Sloan School of Management. “But until that day comes, I would encourage people to be very careful.”

Here’s how to protect yourself, as well as ways to capitalize on AI.

Question AI’s confidence

These tools often sound authoritative, even when they’re wrong. Double-check answers from company chatbots and chatbot platforms.

Be especially careful with those that have a disclaimer stating they’re in an early stage or testing phase. For critical or complex financial questions, ask the chatbot to connect you with a human, or call the customer service line and hit the prompts to speak with a live representative.

Be mindful that platforms such as ChatGPT, Claude and Perplexity can provide incorrect, misleading or fabricated information, in what’s known as “hallucinating.” They may also give you outdated material.

In short, don’t rely on AI as a singular source of truth. “Use it to help make life easier, but not for vital or sensitive decisions,” says Emma Foulkes, a certified financial planner and partner at Collective Wealth Partners in Atlanta.

(Image credit: Getty Images)

Never provide personal details such as your full name, address, account numbers or Social Security number on a platform such as ChatGPT.

“The moment that you start putting in sensitive information and getting value out of it, you’re going to be tempted to give it more information,” says Lo, adding that “once you give it that data, you are not getting it back.”

Before you share anything, he says, ask yourself: Would I be comfortable if this appeared on the front page of the New York Times? And would I be okay with someone taking the information submitted, claiming it as their own and using it however they want?

Use AI as a creative brainstorming partner

A conversation with any number of AI tools and platforms can give you helpful advice on financial goal-setting, job-interview questions, budgeting and more.

For instance, you can provide general details about your life and then ask for ideas on how to reduce monthly expenses. Or you can go even deeper, asking it to produce recipes for 20 low-sodium dinners you can make at home that take less than half an hour to prepare and use less than $20 worth of ingredients. Within seconds, you’ll have a complete meal plan.

Tap into it as a junior research assistant

AI can assist you in gathering information — helping you compare credit card reward programs, say — and it can even put the data into a format that’s easy to plug into a spreadsheet.

But it’s not a substitute for expert advice, so remember to fact-check its responses. When using an LLM, ask it to provide sources so you can verify the information. (Keep in mind that LLMs can also generate links that don’t work and cite fictionalized sources.)

Foulkes occasionally uses Perplexity, which acts like a supercharged search engine, for preliminary research — and she puts an emphasis on preliminary. Sometimes, Perplexity provides her with the sources she needs. Other times, it gives her random, unhelpful links.

Experiment with AI in low-risk ways

When it comes to high-stakes areas such as investing and financial planning, it’s often better to rely on dedicated apps and websites from trusted providers, such as well-established banks and credible software companies. If you use general-purpose AI tools, they may not take important details, such as inflation, tax planning and health care costs, into consideration.

However, it can be helpful to explore what’s out there in low-stakes situations to get an understanding of AI’s limits and capabilities and stay on top of how AI is evolving. The bottom line is to proceed with caution and keep qualified humans in your financial life.

“AI is a brilliant product, but it can’t deal with nuances,” says Foulkes. “It doesn’t have the expertise of a CPA, an estate-planning attorney or a financial planner.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.