Unless you’ve been off-grid in the last five years, chances are you’ve watched the meteoric rise of artificial intelligence and its usage by humans unfold online right in front of you. What’s more, you’ve probably gotten curious, logged on to an AI model, and asked it a question or two (yes, we know you did, so don’t deny it). Ever since ChatGPT’s debut in late 2022, people have started to depend on artificial intelligence to answer their questions and help navigate life, from putting together the perfect pasta recipe to more serious topics, such as creating a will or making investment decisions. And as more companies like Google and Meta have introduced their own AI models, this trend of human reliance on AI has only increased.
This isn’t necessarily a negative, as AI models make research incredibly easy and efficient compared to sorting through the various articles a search algorithm throws at you to find an answer. However, while students might use AI to cheat on exams and lawyers have used it to (incorrectly) cite case law, the larger concern isn’t the use of artificial intelligence, but people’s trust and reliance on this technology.
Although you might just want to use AI to figure out why the cat keeps digging in the litter box, things start to get a little dicey if you take the information AI offers without fact-checking the info or accounting for its biases. And when people start to use AI as a financial advisor instead of a human one, they run the risk of receiving poor advice that could lead them to financial hardship in the future.
More than eight out of ten Americans now trust artificial intelligence to help guide their financial decisions, as per BestMoney survey.
Pros of Using AI with Finances
Artificial intelligence excels when it comes to sorting information and relaying that information to the user in a different way. In terms of general financial questions, ChatGPT and other models do a good job of breaking down those confusing finance concepts and explaining them in layman’s terms. For example, someone may not understand how budgeting helps track monthly expenses and control spending. AI can explain it clearly using practical, easy-to-follow examples.
AI can also help with straightforward financial input. If someone with little spreadsheet experience wants to use one for their personal budget, AI can take the numbers and format them into a ready-to-go spreadsheet. What’s more, AI could explain some functions and formulas that they might find useful in the future, expanding their knowledge base as well as their ability to use the program for their budgeting needs.
For encyclopedic and financial information, AI is as good as Google. But, when it comes to the important questions, like those that impact your finances, you’re better off taking those to a pro.
- Also read: My Dad Got Sick—Doctors Dodged, AI Didn't
Cons of Using AI with Finances
The biggest issue with AI is that it cannot generate something new, as the algorithm picks up information from the internet and sorts through it to answer questions. This may not matter for questions about recipes, but it can pose an issue for questions that require critical thinking. No matter how real AI might seem, it isn’t human. So while it can give you options and advice, it doesn’t have the discernment to tell you which options are good or bad or best for you.
Another pitfall of using AI with finances is that you may not know what sources the information came from. For example, if AI is telling you that it's a good time to invest in a particular company, you should wonder why and what sources it used to come up with that information. If it’s pulling positive information from the company’s website, the bias can skew AI’s output. Even worse, AI could hallucinate and give a totally made-up answer. So checking sources and information is key. Even slightly incorrect or inaccurate information can wreak havoc on your financial future if you make the wrong decision.
When it comes to your finances, you usually have to include a lot of personal information to get an answer tailored to you, but you’re relying on AI companies to remove your personal data without any way of checking or guaranteeing that. Uploading your personal information can put you at risk, and without adding in your personal information, it’s difficult to get the specific answers you need to make sound financial decisions that account for your unique circumstances.
Best Practices of Using AI for Finances
Artificial intelligence is not evil, it’s a tool. And if you use AI, it’s important to develop good habits and avoid being overly dependent on it for every answer, especially when it comes to important life decisions. Below are some dos and don’ts to keep in mind when using AI for help.
- Do doublecheck… and then triplecheck. AI is known to hallucinate, give out false information, and could be using biased information. By double-checking answers, information, and sources used, you can avoid operating on incorrect information. Don’t just ask for information but also ask AI for the sources it used, so you can check and see if they’re reputable and reliable.
- Don’t use AI for personal matters. ChatGPT is good at explaining concepts from a bird’s-eye view, but things get tricky when you ask it to apply that reasoning to your personal life. You can ask AI to explain how the stock market works, but don’t ask it to take the current climate of the stock market and upload your personal financial information to get back advice on what you should invest in.
- Do use a human backup, especially on the financial questions. There’s a reason why AI hasn’t taken over the financial advisor sector yet. Artificial intelligence can’t think critically, but humans can! Take advantage of human advice and compare it to what AI says, remembering that both can make mistakes, but only one has original thoughts and ideas.
Conclusion
People talk about financial literacy and media literacy, but it’s clear that the world is going to need to develop AI literacy skills as well. Artificial intelligence is an amazing invention that has many possibilities with just as many limitations. By building good AI literacy habits, people can continue to use AI as a tool for many questions they might have, even those about finances. By remembering to double-check information, keep questions general, and ask a human financial professional about questions with big consequences, AI and humans might just develop a healthy relationship with each other.
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