If you’ve ever turned to ChatGPT to draft a tricky email, find a meal prep recipe, or brainstorm ideas, you know just how beneficial it can be. Over the past few years, generative artificial intelligence (AI) tools such as ChatGPT, Google Gemini, Grok, and Perplexity have taken the world by storm. They provide answers faster than you can type, are free to use, and are available 24/7—whether it’s 10 a.m. or 1:30 a.m. It feels empowering, like having a personal advisor right in your pocket.
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But, generative AI isn’t limited to writing emails. As these tools become more present in our daily lives, more people are turning to AI chatbots for guidance on personal matters as well. For instance, a 32-year-old journalist from Noida recently searched on ChatGPT, “Which tax regime would save me more for the financial year 2024-25?” while preparing to file her income tax return. She proudly declared, “Who needs a tax consultant when you have ChatGPT to save taxes?” She’s likely not alone. More and more people are embracing generative AI tools for their personal financial queries, even more than they reach out to professional financial advisors.
Now the question is: Can you trust these AI chatbots to guide your financial decisions?
To understand it in detail, we decided to present a few financial situations to ChatGPT to see what kind of advice it could offer. Then, to evaluate how accurate those suggestions were, we tapped a 1 Finance Qualified Financial Advisor(QFA)—a real human expert who can provide financial advice—to assess them. Read on to find out where AI showed promise in helping us navigate difficult financial scenarios—and where it fell short.
Assume A makes ₹15,00,000 annually. He has ₹1,00,000 in credit card debt on one card and ₹25,000 debt on another. His monthly rent is ₹25,000, his car EMI is ₹12,000, and his utilities are ₹7,000.
Question 1: How can A pay off my credit card debt efficiently as soon as possible?
ChatGPT answer:
To pay off the credit card debt efficiently, prioritise the ₹1,00,000 card with the higher interest rate first using the avalanche method, while making minimum payments on the ₹25,000 card. A can allocate a fixed, aggressive monthly amount (e.g., ₹30,000 to ₹35,000) toward debt repayment by cutting non-essential spending and temporarily pausing investments. Avoid new debt and stop using credit cards until fully repaid. If cash flow is constrained, explore converting the larger balance into a lower-interest EMI or taking a personal loan at better terms to replace the high-interest card debt. Once cleared, rebuild the emergency fund to cover at least three months of expenses.
1 Finance Qualified Financial Advisor says:
“The advice from ChatGPT covers the essentials,” says Manan Dua, a Qualified Financial Advisor at 1 Finance. Pausing investments and avoiding further credit card use is also smart—credit cards can charge over 40%, so every rupee toward repayment saves more than stock market gains.
“I’d want to understand why this debt built up,” says Dua. “Was it overspending, a one-time emergency, or ongoing lifestyle pressure? Unless we fix that root cause, the debt can return.”
Question 2: A has set aside ₹20,000 as an emergency fund. How much should he save monthly for an emergency fund?
ChatGPT answer:
A needs an emergency fund of ₹1.65 lakh to ₹3.3 lakh (three to six months of expenses). With ₹20,000 already set aside, saving ₹25,000 per month for 12 months can help him reach ₹3 lakh. Alternatively, A could save ₹15,000 per month for 20 months. While debt is outstanding, consider saving ₹5,000 to ₹10,000 per month. After the debt is cleared, increase savings to reach the full target. Use a liquid fund or a high-interest savings account.
1 Finance Qualified Financial Advisor says:
“ChatGPT’s advice to put aside ₹5,000 to ₹10,000 while aggressively paying off debt, and to build an emergency fund once the debt is gone, is sensible,” says Dua. However, there are nuances that the AI chatbot overlooks that a real human financial advisor would not.
The first question a financial advisor needs to ask is how stable A’s job is. “If A’s ₹15 lakh salary is stable, three to six months of expenses is fine. But if A is in a volatile industry, self-employed, or working on contracts, he may need nine to twelve months of expenses in your emergency fund,” says Dua.
“Do you have children? Are your parents relying on you? Do you have any medical conditions in the family?” AI doesn’t ask these questions, but they significantly impact how much you really need in your emergency cushion, Dua adds.
Where you park the emergency fund also matters. Keeping all of it in a savings account is safe but provides poor returns. The smarter strategy is a tiered approach: “First, keep ₹50,000 in a savings account for instant access. The rest should be in liquid mutual funds or sweep-in fixed deposits, which still give you access within a day but earn higher returns,” Dua suggests.
Additionally, behavioral factors cannot be ignored. “Some people feel anxious with just ₹20,000 sitting in savings, while others treat emergency money as spending money. AI doesn’t coach you through that discipline. That’s where your financial advisor steps in—to keep you consistent throughout the 12 to 20-month journey,” Dua says.
Question 3: What tax-saving strategies or exemptions can A take advantage of with a salary of ₹15,00,000?
ChatGPT answer:
With a ₹15 lakh salary, the old tax regime offers multiple benefits:
-Section 80C: Up to ₹1.5 lakh (includes PPF, EPF, ELSS, 5-year FD, LIC, tuition, and home loan principal)
-Section 24(b): ₹2 lakh for home loan interest
-Section 80D: ₹25,000 (self/family) + ₹25,000–₹50,000 (parents)
-Standard deduction: ₹50,000, automatically applied
-Section 80CCD (1B): An additional ₹50,000 via NPS (only if a long-term lock-in is acceptable)
HRA: If renting, subject to conditions. Potential deductions amount to ₹5.75 lakh–₹6.25 lakh, resulting in a taxable income of ₹9 lakh. File Form 12BB with your employer. The new regime offers no deductions but lower flat rates.
1 Finance Qualified Financial Advisor says:
The information doesn’t truly align with A’s situation. As Dua points out,“You don’t even know whether A has a home loan. That deduction is meant only for people who’ve bought a house with a loan.”
The AI suggested placing ₹1.5 lakh under Section 80C and ₹50,000 in NPS. When your annual surplus is about ₹8.5 lakh, locking ₹2 lakh into tax-saving instruments means using nearly one-fourth of your extra money. If your financial base were already solid, I’d agree. But in his case, A has bigger fires to put out first, Dua advises.
A should prioritise clearing his debts. “On ₹1 lakh credit card outstanding, the bank could charge you ₹30,000–₹40,000 each year. That’s money going straight down the drain. No tax-saving product—whether it’s PPF, ELSS, or NPS—will offer that kind of return. Thus, the best strategy? Clear the debt first. Once the debt is cleared and an emergency fund is established, then we can explore tax-saving investments,” Dua adds.
ChatGPT vs. financial advisor: Whom should you trust for financial advice?
It’s hard to deny AI’s potential. These tools offer instant advice at any time, providing insights at your fingertips whenever needed. But how do they do that? AI tools like ChatGPT utilise large language models (LLMs) to predict the next word based on patterns learned from data. This means that the answers they provide are generic, not tailored to your specific situation.
They lack details about you beyond what you type in the chatbox; they don’t know your financial personality, how much risk you can take, your family situation, your long-term goals, or anything else. Therefore, even if it seems that ChatGPT is offering expert advice, it is merely generating responses based on similar patterns rather than personalising the guidance.
Managing money is not just crunching numbers on a screen; it involves your habits, risks, family situation, goals, and behaviour when faced with life’s surprises. This is where AI falls short, and where a financial advisor steps in.
Additionally, the human element is missing. Speaking to a real person who can understand your financial personality and empathise with your unique circumstances is vital. An advisor doesn’t just tell you what to do; they explain how you got to your current situation, how to avoid repeating mistakes, and how to adapt when your circumstances change. Clearing debt, building safety nets, investing wisely, and saving on taxes all require a personal plan that factors in both mathematics and mindset.
A financial advisor can use their expertise to plan your finances effectively. Money decisions are emotional and personal, not merely logical—a nuance that robots cannot grasp.
Conclusion
So, can you trust AI tools such as ChatGPT with your money? Yes, for quick knowledge, ideas, and broad direction.
But should you rely on it fully to manage your money and ditch a financial advisor? No. The safest approach is to use AI as a tool for awareness, then consult a Qualified Financial Advisor who can provide context, accountability, and a hyper-personalised plan. A great combination is what truly fosters lasting wealth.
