How and how not to use AI for help with your finances

Experts recommend being cautious and critical if you are asking AI chatbots for money advice. (Adobe Stock) Link copiedShareShare articleHave you considered using artificial intelligence (AI) to help make a budget or get advice about your finances? In a recent Instagram reel, motivational speaker, podcaster and author Mel Robbins encouraged women to embrace generative AI tools (Microsoft's Copilot in particular, which the caption stated she had partnered with) to help manage their money. And while using AI to help with your finances is not always a bad idea, there are some important things finance and AI experts want you to be aware of before you do. The Australian government's MoneySmart website says "AI tools can produce inaccurate or biased information". It warns against relying on AI tools such as Copilot, ChatGPT, Claude and Gemini alone, especially for investing. Antoine Didisheim, a senior lecturer in the Department of Finance at the University of Melbourne, has researched large language model (LLM) systems like those used in most modern AI assistants. Dr Didisheim says "hallucination" is one of the reasons these AI systems can provide inaccurate information. AI hallucination is when the technology randomly presents something inaccurate or completely fictitious as fact. Professor of business information systems at the University of Sydney, Uri Gal, says hallucinations and inaccuracies happen when using these tools. "They're optimised not for accuracy," explains Professor Gal, "they're optimised for plausibility. "They're optimised to generate responses that seem plausible to keep you engaged and to keep you on the platform to use the tool." Which can mean, Dr Didisheim says, "you chat with [the AI assistant] and it all sounds somewhat sound, but [the assistant is] just following you along and kind of encouraging you along. "And you will not realise you were wrong until your crypto investment hits at zero." Bias is another important risk to consider, Dr Didisheim says. In the financial space, AI tools are likely to be influenced by "traditional biases" such as gender and race. Dr Didisheim says some research has suggested that AI might automate financial advice that suits the risk preferences of a young man. "AI learnt by reading what humanity wrote, and who is writing finance advice on Reddit [for example]? Well, fairly well-off 30-year-old American white males." Other research, Dr Didisheim says, found AI would stop recommending anything risky at all if it realised the user was a woman. "Simple detailed prompting" can help counter this and "remove a lot of those biases", he says. Professor Gal says "you should be concerned" about your privacy and the security of your financial and personal information when using AI tools. "It's difficult to keep track of the ever-shifting privacy policies of all these different companies, but as a starting point, I think we should all assume that whatever we put in there — at the very least — is going to be used to train those models," he says. "In worse circumstances, it might be shared with other entities for different purposes and these could range from government bodies, to data brokers, to advertising companies and everything in between." Financial educator, and former financial planner and mortgage broker, Natasha Janssens has similar concerns and recommends against sharing financial documents, such as bank statements, pay slips and tax returns with AI. Natasha Janssens is a financial educator, behavioural money coach and the founder of Women with Cents. (Supplied: Natasha Janssens) The MoneySmart website says publicly available, general-purpose AI can be a useful "learning tool". This can include breaking down complex information, answering simple questions, suggesting topics to research next and highlighting general market trends. While financial tension between partners isn't always about money, many people clash over values, spending habits and how they respond to financial pressure. Ms Janssens says using it when researching a financial concept or approach is a lower risk way to use it for your finances. "You could ask it questions like: What are some risks? What are some things that I should consider when I'm researching this particular investment?" Dr Didisheim suggests using AI to help with tasks where you can check over the work and provide timely feedback, such as building a household budget. He explains that one of the problems with using AI tools for personal investing advice is that the negative feedback which helps to tailor the advice "would be very delayed". Dr Didisheim says some AI tools are better at particular tasks than others and the best one to use might come down to what you're asking it to do. "I would avoid the free version for something as important as your personal finance," he adds. Dr Didisheim and Professor Gal both recommend cross-checking any information with other sources. You can also use mo

How and how not to use AI for help with your finances

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