ChatGPT, the popular artificial intelligence (AI) bot, sometimes takes criticism for providing erroneous calculations or generic information. But when it comes to outlining the worst things you can do with your money, the AI is spot-on.
I asked ChatGPT this very question to see what advice it might give someone making this common search query, and the answers it gave surprised me. They read just like the recommendations a professional financial advisor might give clients who are beginning their financial lives. In other words, this information, while perhaps basic for advanced investors, is the type of knowledge that should be part of a financial literacy course for all Americans.
Here’s what ChatGPT had to say about the worst things you can do with your money.
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Let It Sit Idle (Too Long)
ChatGPT rightly points out that if you’re not earning an investment return on your money, its purchasing power can fall dramatically. As the AI bot says, “Over 10 years, 3% inflation can shrink your money’s value by nearly 30%.”
To avoid this, you’ll want to keep large sums invested, rather than in low- or no-interest checking accounts or, even worse, under your mattress.
Chase ‘Hot’ Trends Without Understanding Them
One of the easiest ways to lose money in all markets is to jump into “hot” areas just because their prices are going up. If you don’t know what you’re doing, it’s all but inevitable that you’ll be one of the ones left holding the bag when the party ends.
As ChatGPT puts it, you should “avoid jumping into crypto, meme stocks, NFTs or AI play just because they’re trendy….Hype cycles create bubbles. You often buy high and panic-sell low, compounding losses.”
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Carry High-Interest Credit Card Debt
This is a financial killer that should be common knowledge; unfortunately, Americans still carry credit card balances to the tune of $1.18 trillion, according to the Federal Reserve Bank of New York. The worst part isn’t even the going-into-debt part — it’s “paying 20%-plus interest while making minimum payments,” as ChatGPT says. “Compound interest works against you. A $5,000 balance can cost you thousands more over time — for nothing gained.”
Buy More House Than You Can Afford
Homes in the U.S. are at near-record levels of unaffordability, and this is pushing some buyers to pay more than they can afford. ChatGPT points out that this is a bad strategy because “it locks up cash, increases risk in downturns and may leave you ‘house poor’ and unable to save or invest.”
