I Put a Chatbot’s Financial Advice to the Test

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Saving for college has been a financial challenge for me ever since becoming a mom.

To figure out my own college savings plan, I asked ChatGPT for help. It seemed like the perfect question for an AI-powered chatbot, because it was complicated and I didn’t want to wade through reams of data and advice manually.

I started simple. I asked how much I should save each month based on the ages of my children and predicted cost of college.

ChatGPT came right back with a helpful chart. It outlined a plan that included saving the most money right away for my oldest child, given that those payments would start first.

The problem is that the recommendation was to save far more than could possibly make sense for my budget — a whopping $8,000 a month.

To get to something more realistic, I provided ChatGPT with additional information about my expected rate of return, time horizons for each child and the cost of nearby public universities.

This time, the tool gave me a better chart. It suggested I sock away around $3,000 a month for my oldest child. It’s still too much for me, but I was starting to get a reality check about how expensive college is.

ChatGPT still didn’t have background information about my broader financial goals. Until I prompted it to consider my own retirement savings, it didn’t take them into account.

That’s why many financial experts caution consumers against relying just on AI for financial decisions without getting second (or third) opinions from humans.

“It cannot understand your own money relationship. There’s the traumas, the lessons we’ve learned, things that are built on your whole life story. No matter how much context you give, it can’t understand those types of feelings toward money,” says Mykail James, a Washington, D.C.-based financial educator who is known as the “Boujie Budgeter” on social media.

“That gives you a better outcome than solely asking ChatGPT,” she says.

“What systems do you already use?” asks Miklos Ringbauer, a certified public accountant and founder of MiklosCPA, an accounting and tax strategy firm in Southern California. He suggests starting with those.

For example, your bank, credit union or online tax preparation tool might incorporate AI tools that already have access to some of your financial details. That way, you’re not sharing personal information with a new platform.

Ringbauer says to avoid uploading financial documents like tax returns to new AI platforms because they contain so much personal information, including Social Security numbers, income details and investment accounts.

“When you dump your tax return in, it has not only your identifying information, but the type of jobs you had, the companies that you worked for, the banks that you are banking with,” he adds. If there is a data breach, that sensitive information could be vulnerable.

Keep AI searches general, suggests Frank Davis, president of New Era Financial and registered investment advisor in Toms River, New Jersey.

After all, he adds, “It doesn’t have any responsibility for giving you the wrong advice.”

It’s a good warning when you consider that about half (52%) of Americans who have used an AI chatbot for personal finance questions have lost money due to the advice, according to the NerdWallet survey.

Davis suggests asking general questions such as, “I have $50,000 saved and I need $300,000 in 20 years, so how much more should I put in? And where can I get a 6% rate of return?”

Similarly, Ringbauer likes AI chatbots for basic financial education. “It can explain the financial topic that you may be worried to ask your financial advisor or trusted accountant,” he says.

You can ask any question without feeling embarrassed, he adds. “For that purpose, it’s fantastic.”

Ronnie Thompson, investment advisor representative and owner of True North Advisors in Northville, Michigan also sees AI chatbots as tools that can empower people to get better at the basics.

“I’ve seen households who did not have a proactive budget create and use one with AI,” he says. “AI can create a clear-cut game plan for a budget, or identify best practices such as how to pay off student loans.”

As for my college savings plan, I appreciate the chart that ChatGPT made for me. It helped me organize my thoughts about how much to contribute each month for each child.

But I won’t be acting on it just yet. I need a savings plan that considers the broader context of my life, and that’s still a work in progress.

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