AI can help you save money better, but don’t rely on it fully just yet
UAE financial planners test the effectiveness of AI tools like ChatGPT in managing money
Dubai: ‘How to use AI’ headlines have been gaining traction these past months, especially to know how the machine or software intelligence can be used to write a resume or an essay, generate an image or an event, and even investing or making money. But can it help manage your money better?
“Artificial Intelligence (AI) can be used to analyse your spending behaviour and base its decision on patterns observed in transactions that are done routinely,” explained UAE-based financial advisor Mohammad Shaan, who has personally tested AI-driven chatbots like ChatGPT for ways to save.
“Given that the technology is programmed to give a solution based on data provided to it and information it already has access to, a spender can gets a clearer idea on his or her spends based on which he can plan his spending or investment strategy to budget or allocate funds better.”
AI can help your finances better
Shaan also detailed how AI can tell you to prioritise paying down your high-interest debts, starting an emergency fund based on your income and savings, whether or not you should consider investing in market instruments, etc. But what’s a key risk to using such applications to manage finances?
“AI applications relies on information already available so far, so it can’t step in, access your bank accounts, and independently manage your money; there are risks to giving it free rein,” said UAE-based financial planner Andrea Barbara, who has come across several AI queries from residents.
“Once you dig a little deeper, it’s clear that AI tools won’t become a financial adviser any time soon, primarily because the language-based chatbot doesn’t have access to real-time information on interest rates, stock prices, bank fees or insurance policy prices – at least not just yet.”
“It may not also consider how much risk you can take on, but it can take into consideration your age and how long you plan to stay invested, and come up with a solution. If it cannot come up with an exact individual-specific solution, it will come up with the next best solution based on its database.”
More financial use cases for AI
For now, AI can prove useful if you find yourself in need of advice or a savings strategy after giving insight on the financial predicament you are in or how much you see your savings grow in a pre-specified period of time.
“It can also give you good ideas on how to save on electricity, how to save on your water bill, or other queries you might not think of yourself. Ask it what you already have and what you can make out of it if you’re not exactly sure what to do,” added Barbara.
“One proven use case is to save on travel by looking for cheaper flights for you. It can tell what kind of hotels you should stay in under a certain budget, destinations to help with certain expenses. It can sort of plan the entire itinerary for you and you then don’t have to pay a travel agent for that.”
“While there are increasing AI uses in travel planning, remember that artificial intelligence searches are not always accurate, so double-check recommendations and prices before you book,” cautioned Dubai-based travel agent and itinerary consultant Richa Dev.
“While internet search engines put up listed links and articles about destination attractions and accommodations, AI tools like ChatGPT can save you money on a particular trip when you specify the budget you have pre-determined for the destination you plan on travelling to.”
Can AI help you shop and save better?
While AI is not going to tell you that there is a particular item on sale right now at a specific online portal, it can give you basic tips about finding items. For instance, AI tools can produce results like shop around certain times of the year, during specific occasions or sale events.
“Let’s say you were searching for a brand of vacuum cleaners, and it suggests models on sale, how much you can save, but the problem is that it likely won’t tell you stores to go to as there are no links to click,” explained Anil Pillai, a Dubai-based retail consumer analyst, who too has been testing AI tools.
“You are better off finding deals yourself. Instead, use it as a starting point to see when a sale is likely. Then set price alerts, search prices using Google Shopping, and look at deal sites to get the best price on specific items. It is more work for you, but you will get better savings.”
Bottom line?
If you were to paint a realistic picture, it’s a widely known fact that AI has already been in use across several industries, particularly in finance. But with tools that require AI, which is a form of machine learning that makes use of tons of pre-existing data, you get analysed results in record time.
“Trading uses algorithmic functions, that’s age-old news. But human input is needed to make rules and set up ‘if-then’ actions to tell it what to do and when. AI trading takes that one step further with the machine analysing the data and making the investment decisions itself,” Shaan added.
“So what’s new is the fact that when AI can’t help, automation can. However, the blanket rule applies: AI and automation may help you stay on top of your spending, but not if you aren’t keeping yourself under control. Keep that in mind.”