Using AI to Better Manage Your Money

Artificial intelligence has gone from something that seemed so futuristic to something many of us use every day. We ask AI to write emails, plan vacations, find recipes, answer questions and organize information – but could it also help us become better at managing money?

Of course – but it comes with an important caveat.

AI can be a useful financial assistant. It can help you create a budget, brainstorm ways to save, identify spending patterns, think through impulse purchases and learn about financial topics. It can even help you turn a vague goal like “I need to save more money” into practical steps.

But one important thing to remember is that AI isn’t a financial advisor, and it isn’t always right. More importantly, you should never assume that a general-purpose AI chatbot is the appropriate place to enter private financial or identifying information.

The best approach is to use AI to help you think about money – not to hand over control of your money.

AI Can Help You Build a Budget

Creating a budget can feel overwhelming, particularly if you’re not sure where to begin. AI can help you create a framework.

For example, you could ask:

• “What categories should I include in a household budget?”
• “Help me create a budget based on a monthly income of $5,000.”
• “Give me ideas for reducing my monthly expenses by $200.”
• “What expenses do families commonly forget to include in their budgets?”
• “Help me create a budget that prioritizes saving for an emergency fund.”

You should not provide your name, bank account information or any other identifying details to get useful suggestions.

As an easy and extra layer of financial protection, you could even give AI rounded, generalized numbers instead of your exact financial information. For example, instead of saying you are spending $1,768 per month on housing, round up to $1,800.

AI can help you organize that expense into your budget, and you can identify the extra savings and set aside the difference in a savings account. This way, you’re protecting your financial information, while also proactively increasing your savings.

The final budget, however, should reflect your actual circumstances and priorities. A budget that works for one household may not work for another.

5 MISTAKES TO AVOID FOR BETTER BUDGETING

Find Opportunities to Save

Sometimes, the hardest part of saving isn’t knowing what you should save – it’s figuring out where the money will come from. While disguising the information entered into AI platforms by rounding up expenses on your budget could be a way to start setting money aside, AI can also help brainstorm other ways to save.

Ask it for ideas to reduce spending on:

• Groceries
• Dining out
• Subscriptions
• Entertainment
• Utilities
• Transportation
• Clothing
• Travel
• Holiday Spending
• Recurring Memberships

You could even ask AI to create a savings challenge for yourself.

For example:

“Create a 30-day savings challenge that helps a family find $150 in savings each month without eliminating everything they enjoy.”

The resulting ideas could give you a starting point for identifying expenses you can reduce, replace, or eliminate.

SAVINGS CHALLENGES THAT BOOST YOUR BANK ACCOUNT

Sometimes, the best savings strategy isn’t giving something up permanently. It may simply be finding a less expensive alternative.

In this case, ask AI to compare prices of your favoring dining out spots to help you pick a more affordable option that you still love.

Let AI Challenge Your Impulse Purchases

We’ve all experienced the temptation to buy something simply because it looks appealing, is on sale, or happens to be in front of us at the right moment.

AI can be useful in giving us a financial pause or giving us the go-ahead.

Before making unnecessary purchases, try asking:

• “I’m thinking about spending $200 on (insert the name the item). Give me questions to consider before buying it.”
• “Compare prices of (insert name of item) across multiple stores to help me find the best deal.”
• “Are there generic brands available of (insert the name of the item) that are the same quality but may be more cost effective?”
• “How much does this item cost per use?”

You can also ask AI to help you consider:

• Do I actually need this?
• Do I already own something similar?
• How often will I use it?
• Is it worth the price?
• Am I buying it because I need it or because I’m excited about it?
• Is the item really on sale, or is the discount encouraging me to spend?
• Is there a less expensive alternative?
• How would I feel about the purchase a month from now?

In this case, AI is not making the decision for you. Instead, it’s helping you slow down long enough to make an intentional decision.

This extra pause can be valuable.

AI Can Help You Learn About Money

Financial terminology can sometimes feel like another language, but AI can explain concepts and adjust the explanation to your level of understanding.

Ask things like:

• “Explain APY like I’m a beginner.”
• “What’s the difference between a checking and savings account?”
• “What is compound interest?”
• “Explain the difference between a traditional and Roth IRA.”
• “What is a mortgage escrow account?”
• “What’s the difference between a fixed and variable interest rate?”
• “What questions should I ask before taking out a personal loan?”

This can be especially helpful when you’re preparing to speak with a banker, lender or financial professional.

One of AI’s greatest financial benefits may be helping you become a better-informed consumer.

Use AI to Prepare for Conversations with Your Bank

Preparing questions prior to meeting with your bank is a great way to use AI. Whether you’re buying a home, opening your first bank account, starting a business, or saving for college or retirement, this approach can put you in a stronger position because you’re walking into a conversation prepared.

For example:

• Buying your first home? Ask AI to create a mortgage question checklist.
• Opening a bank account? Ask which features and fees to compare.
• Starting a new business? Ask what banking questions a new business owner should consider.

Your banker can then provide information based on your specific financial circumstances, products and goals.

Don’t Let AI Make Every Financial Decision

There is an important distinction between using AI to explore an idea and letting AI make major financial decisions for you.

AI may provide useful general information, but it doesn’t (and should not) know your complete financial picture.

Items like other debts, income changes, family responsibilities, tax situation, risk tolerance, and long-term goals, etc. need to be taken into consideration when making major decisions. AI may not know how these items impact your finances and therefore may offer advice that could not be helpful or could even damage the financial work you’ve already put forth.

Not to mention, when it comes to AI, entering too much information on these topics could be unsafe, as is entering any personal information onto the internet.

For significant decisions involving things like mortgages, investments, retirement, taxes, insurance, estate planning or major borrowing, use AI only as a research and question generation tool, then verify the information with an appropriate financial professional.

Be Skeptical of “Too Good to Be True” AI Advice

AI doesn’t automatically make financial information trustworthy. Be cautious if an AI-generated response suggests that you can:

• Make guaranteed investment returns
• Get rich quickly
• Eliminate debt without making payments
• Avoid taxes through a simple trick
• Earn large amounts of money with little effort
• Take advantage of a “secret” financial loophole
• Guarantee approval for a loan or credit product

There is no shortage of financial misinformation online, and AI can sometimes repeat or generate information that isn’t accurate.

You should ALWAYS verify important financial information with a financial professional BEFORE you act on it.

Never Give AI the Keys to Your Financial Accounts

Once it’s online, it is forever online. This is perhaps the most important part of using AI for anything, let alone financial purposes – knowing what NOT to share.

As a general rule, don’t enter sensitive financial or personal information into a general-purpose AI chatbot. This includes:

• Bank account numbers
• Usernames
• Passwords
• Debit/credit card numbers
• ATM PINs
• Security questions and answers
• Social security numbers
• Driver’s license numbers
• Copies of identification

When you enter information into an online service, you should understand how that information is collected, stored, used, and protected.

Depending on the AI service and its settings, conversations may be retained or processed in ways that aren’t fully understood and therefore, may be accessed by untrustworthy individuals or hackers, exposing you to privacy or security risks.

Even if you trust the AI service, there is another important question you should ask yourself: Why share information that isn’t necessary in the first place?

If AI can help you create a budget without knowing your account number, there is no reason to share it, even if it prompts you to.

Think of sensitive financial information like the keys to your house. You wouldn’t hand your house keys to a stranger just because they offered to help organize your closets.

The same principle applies online.

Remember: the more general the information entered, the more protected your finances should be.

Be Careful with Financial Documents and Screenshots

A common misconception is that sensitive information only means account numbers. Protecting personal information can be just as important. Before uploading anything to an AI tool, look for:

• Your name
• Address
• Account numbers
• Transaction details
• Social security numbers
• Loan numbers
• Credit card information
• Employer information
• Signatures
• Barcodes or QR codes
• Login information/passwords

A document that looks harmless at first glance could contain enough information to identify you or expose details about your finances.

When in doubt, don’t upload it.

Remember That Scammers Use AI, Too

AI isn’t only a tool for consumers – criminals can use it as well.

Scammers can use AI to create convincing emails, text messages and other communication developed off the backs of information AI chatbots have collected from the internet, and from individuals who have entered too much information into AI search engines. This is how scammers make fraudulent messages sound more professional or convincing.

That means you should be cautious even when a message appears polished or personalized.

If someone contacts you claiming to be your bank and asks for a password, PIN, verification code or other sensitive information, DO NOT PROVIDE IT simply because the message looks legitimate.

Instead, contact your financial institution using a trusted phone number, website, or other established method. And if a message creates a sense of urgency, like “act now,” your account will be closed,” or “you must verify immediately,” stop and verify before taking action.

FREQUENT FRAUDULENT MESSAGES TO LOOK OUT FOR

Let AI Work for You Safely

A helpful way to think about AI and personal finance is that AI can help you think, your bank can help you verify, and YOU should always be in control.

AI isn’t going to replace good financial habits, but it can make good financial habits easier to practice.

At the same time, remain skeptical of information that sounds too good to be true and keep your privacy protected by verifying and working with a true banking professional.

Your financial information is valuable. Protect it the same way you would protect your money.

If using AI to help better manage your money sounds like a great way to improve your strategy, make sure you fully understand what not to do in order to protect your finances.