Total household debt jumped $147 billion to top $17.94 trillion last quarter with balances increasing in mortgages, credit cards and auto loans, according to the latest data from the New York Federal Reserve released Wednesday.
Not only are Americans borrowing more, it seems they’re not paying it off at an increasing rate, as credit delinquency inched up from 3.2% to 3.5% for the same period.
These data serve as a wake-up call for many to get their financial books in order over the next six weeks and help prepare for a fresh start with the New Year — and who wouldn’t like that?
For anyone who finds the financial mountains above too daunting to tackle alone — with no idea where to begin — that’s where ChatGPT comes in.
One thing generative AI is very effective at doing is compiling proven steps, plans and action lists for general topics such as debt reduction, budgeting, paying for college, saving for a home or retirement planning.
Below are five starter prompts you can customize or cut-and-paste into the free version of ChatGPT — or any generative AI for that matter — to help wrangle and untangle the money morass you might be facing.
The actual prompts are in quotation marks followed by the underlying rationale and some customization tips you might want to try.
ChatGPT Prompt 1: Create A Budget Plan
“Create a detailed personal budget plan for me, focused on increasing my savings by the end of the year. Please consider the following:
- Identify and categorize key spending areas (e.g., housing, groceries, transportation, entertainment and any other typical expense categories).
- Provide suggestions for cutting expenses or optimizing spending in each category.
- Outline a recommended savings target each month to help me reach my end-of-year savings goal.
- Suggest tools or techniques to track spending and monitor my progress.
- Include advice on managing any unexpected expenses that may arise.”
Rationale: Planning a personal or family budget is at the heart of financial success. This prompt encourages spenders to take a closer look at their income and expenses in detail, helping them realize where they can cut back and save more.
A clear budget enables individuals to identify areas that could be set right by making informed decisions regarding their respective financial situations well before the end of the year.
To really benefit from this one, enter a list of expenses for a couple of months — remember these AIs are public, so don’t upload bank or credit card statements directly.
ChatGPT Prompt 2: Reduce Daily Expenses
“Provide practical, realistic tips to help me reduce unnecessary daily expenses. Focus on commonly overlooked spending areas, such as food, subscriptions, transportation and impulse purchases. For each area, suggest small changes or habits that can lead to significant savings over time. Additionally, offer methods for tracking and evaluating expenses so I can regularly identify new ways to cut costs without compromising my quality of life.”
Rationale: Daily expenses tend to add up to be much more than we think, and they are frequently not vital for us if we’re honest with ourselves. The above prompt challenges spenders to look at their daily habits and find ways to reduce them practically. Lowering expenses frees up funds to be channeled into savings, investing or paying debts.
ChatGPT Prompt 3: Investment Options — Not Advice, Just For Fun
“Provide a list of accessible, beginner-friendly investment options that I can consider and conduct due diligence on, with a focus on building wealth gradually before the end of the year. Please explain each option, how much is needed to get started, including potential risks, expected returns and any costs or fees involved. Additionally, suggest investment platforms or tools suitable for beginners, and include tips on creating a simple, low-risk investment plan.”
Rationale: Investment is one of the major ways of increasing wealth, but due to a number of factors, many people do not know where to begin. This prompt seeks to introduce novices to some simple and accessible investment opportunities that are suitable for beginners.
Starting to invest, even on a small scale, will lay the foundation for long-term financial growth. However, it’s critically important to note that you should not take financial advice solely from a chatbot — do your own research, and take that information, along with the AI’s suggestions, to a licensed financial advisor as a discussion starter.
ChatGPT Prompt 4: Financial Goal Setting
“Provide a step-by-step guide on setting and achieving realistic financial goals within the next several weeks. Start by explaining how to assess my current financial situation, including income, expenses and existing debts or savings. Then, outline a process for setting specific, measurable goals (e.g., saving a certain amount, paying off debt or budgeting for a major purchase). Include practical strategies for tracking progress, staying motivated and adjusting the plan if unexpected expenses arise. Lastly, offer tips on celebrating small milestones to maintain momentum.”
Rationale: Having realistic financial targets can be a great motivator toward achieving success. This prompt can enable you to set specific objectives and actionable plans toward such objectives.
Short-term goals are more likely to assure quick wins, which in turn give way to confidence-building and further encouragement toward continued financial discipline.
ChatGPT Prompt 5: Quick Debt Reduction
“Suggest effective strategies for paying down debt quickly and efficiently before the end of the year. Please focus on practical methods for prioritizing debts (e.g., high-interest first or smallest balance first), as well as tips for creating a budget that allocates extra funds toward debt repayment. Additionally, include ways to reduce interest costs, such as balance transfers or consolidations, and simple lifestyle adjustments to free up more money for payments. Lastly, recommend tools or apps that can help track progress and stay motivated during this period.”
Rationale: Debt slows financial progress through the interest it accrues and stress it inflicts. This prompt may open your eyes to alternative methods of debt reduction you may have not considered, like focusing on high-interest burdens, loan restructuring, debt consolidation or reducing loans.
Efficient debt handling can result in improvement in credit scores while freeing future income toward savings or investment.
Obviously, a series of ChatGPT prompts are not going to turn you into Warren Buffett overnight. However, they might help focus attention on some areas of improvement and bring new ideas that can give you greater control over your financial future — and that’s worth something.
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