Artificial intelligence chatbot is gaining unpredictable popularity in finance sectors. The expert believed that Chatgpt would be a valuable tool to enhance efficiency & reliability for financial services. In the US, some companies are already replacing employees with artificial intelligence Chatgpt. Can Chatgpt provide better personal finance advice than finance experts?
In this article, I have written how Chatgpt explains the financial consequences of using tobacco in personal finance. If you want to learn something new on Chatgpt & its impact on personal finance, then you are in the right blog post. I hope you will find this helpful article. Let’s start with the following:
Key takeaways:
- Chatgpt cannot provide a numerical financial explanation to estimate the financial loss.
- Artificial intelligence is very accurate regarding facts. It can answer any finance question but need more professional judgment.
- Chatgpt can be your finance mentor but cannot make crucial financial decisions.
- Artificial intelligence Chatgpt can be a time-saving search engine but unreliable for personal finance. Chatgpt can help you learn basic personal finance, but you need more real-world experience.
What does personal finance mean?
Personal finance is the art of managing the money you have. Personal finance & wealth management are intimately correlated. Personal finance helps us understand what you make, what your expenses are & how you will spend your income.
For example, the monthly income of Angelina is $5,000. She spent $2500 on rent, car payments, & insurance. From the rest of the money, Angelina expenses $1500 on food, utilities, gas, gym, cell phone, internet, & entertainment. So, she saves wealth (5000-4000) = $1000. Now, wealth management decides how Angelina will invest or spend the remaining $1000.
In short, personal finance helps us to manage living expenditures, whereas wealth management assists us in understanding how we should invest or expense the rest of the money.
Let’s see how Chatgpt defines personal finance:
Chatgpt answers What does personal finance mean?
AI: Personal finance is the process of managing one’s money in order to achieve financial goals. This includes budgeting, investing, saving, and protecting one’s wealth. It also involves understanding how taxes, inflation, and other factors can impact one’s finances. Personal finance is important to ensure that one’s financial goals are met in a responsible and sustainable manner.
Human: Give me example
AI: One example of personal finance is budgeting. Budgeting involves setting a plan for how to manage one’s income and expenses in order to achieve financial goals. This includes creating a detailed budget that outlines where money will be spent and saved, as well as setting limits on spending and tracking progress over time. Another example of personal finance is investing, which involves placing one’s money in stocks, bonds, or other asset classes in order to gain a return on investment.
Chatgpt elaborates on most of the points but does not say anything about wealth management. Wealth management is a crucial part of personal finance. It helps us to understand how you utilize the remaining money. Does it mean, Chatgpt has limited forecasting power? Personal finance is distributing income based on needs without insane expense. So, it helps us to augment the amount of savings. Wealth management is all about predictions, and it teaches us how to use the deposit for maximum financial benefit in the future. It is a professional gap between certified personal finance & Chatgpt ai. In this regard, Chatgpt could not defeat a finance expert like me.
How does tobacco use negatively impact personal finances?
Tobacco uses negatively impact our finance in many ways. It can increase extra expenses, reduce monthly earnings, increase fatal health issues, & also higher health insurance premiums. It also adversely influences our money personality & spending behavior.
For example, Harry spends $8 daily for one pack of cigarettes. Subsequently, his weekly expense will be $56, & $2912 ($56 X52 weeks) will be the yearly expense. In this situation, Harry can deposit $2,912 in the bank or just expenses as usual.
Now the question is, should Harry deposit in the bank? Or is it wise to spend on smoking?
Let’s consider some financial scenarios:
Financial scenario-1:
Assume that Harry deposited $2,912 for ten years at 3% yearly bank interest.
So, Harry can save $130,458 if he gives up smoking.
Financial scenario-2:
Assume that Harry deposited $2,920 for 20 years at 3% yearly bank interest.
So, Harry can save $175,302.4 if he gives up smoking.
Financial scenario-3:
Assume that Harry deposited $2,920 for 30 years at 3% yearly bank interest.
So, Harry can save $235,580.8 if he gives up smoking.
In this phase, you may ask what would happen if Harry didn’t save money.
Let’s analyze some lung cancer survival rates to know how long the average smoker lives.
- Around 40% of people out of 100 survive lung cancer in about 1 year.
- About 15% of people out of 100 stay lung cancer for about 5 years.
- 10% out of 100 people survive lung cancer for 10 years.
Assume Harry was 60 at the end of the 30 years & develop lung cancer.
How many years will Harry live now? Minimum 1 year to maximum 10 years.
So, Life expectancy range=Max-Min
=10-1
=9
Due to lung cancer, Harry will lose 9 years of life.
Now you decide what you want after 30 years; $235,580.8 in the bank account or roughly lose 9 years of your life without a single penny.
As a finance expert, my advice will be to change your smoking behavior & save $235,580.8 in the bank.
Let’s see, how does Chatgpt approach this question?
How does Chatgpt answers tobacco use negatively impacts personal finances?
AI: Tobacco use can negatively impact personal finances in a number of ways. Smoking is an expensive habit that can quickly add up in terms of frequent purchases of cigarettes and other related products. Additionally, smoking can reduce life expectancy, which means that smokers may have to save more money for retirement due to the shortened time frame. Finally, smoking can lead to an increased risk of serious health issues, which can lead to costly medical treatments or lost wages due to missed work.
What Chatgpt write is an entirely informational response that lacks logical financial explanation. This answer doesn’t satisfy me. I thought maybe Chatgpt needed more clarification regarding my question. Therefore, I have asked Chatgpt to write detail about how tobacco adversely impacts personal finance. Let’s see what Chatgpt ai writes:
How does Chatgpt details tobacco use negatively impacts personal finances?
AI: Tobacco use can have a significant negative impact on personal finances. Smoking cigarettes is an expensive habit that can quickly add up in terms of frequent purchases of cigarettes and other related products.
Additionally, smoking can reduce life expectancy, which means that smokers may have to save more money for retirement due to the shortened time frame. Furthermore, smoking increases the risk of serious health issues such as cancer, heart disease, and stroke, which can lead to costly medical treatments or lost wages due to missed work.
Finally, smokers may be charged higher premiums for certain types of insurance due to the associated health risks.
The qualitative response. Anyone without a finance background can assume this type of fact. In finance, people love numbers; they want to know specific financial losses due to smoking. Chatgpt doesn’t provide numerical figures or suggest why smoking behavior negatively impacts personal finance. Can you make a financial plan based on this type of response? I don’t think so. We need comprehensive economic analysis for crucial financial decisions. Was not Chatgpt write an answer like Uncle Sam? However, this answer can be helpful to learn but different from finance experts.
What’s a financial consequence of using tobacco?
Using tobacco has negative financial consequences on personal finance. Tobacco is highly expensive, which reduces income capacity and leads to significant health issues that are expensive to treat.
For example, Dave & Lincoln are two friends & both of them earn monthly $3000. Dave spends $30 weekly on cigarettes, whereas Lincoln is a nonsmoker. Both of them are interested in doing life insurance. In this case, the insurance company charges more money to Dave for insurance premiums than Lincoln. Why? Because a smoker bears more significant health risks in terms of a nonsmoker. So, Dave has more likelihood to claim insurance money. The premium amount for most insurance companies will differ from 30% to 50% between Dave & Lincoln. If Lincoln pays $30, Dave will pay $50 for the insurance premium.
So, this is one insight into the financial consequences of using tobacco. Let’s see what Chatgpt writes:
Chatgpt answers What’s the financial consequence of using tobacco?
AI: One financial consequence of using tobacco is that it is an expensive habit that can quickly add up in terms of frequent purchases of cigarettes and other related products. Additionally, smoking could lead to increased health care costs as a result of medical treatments for illnesses related to tobacco use.
Finally, smokers may be charged higher premiums for certain types of insurance due to the associated health risks.
Chatgpt gave me three consequences: expensive habits, health costs & higher insurance premiums. This time Chatgpt was able to read my mind & gave a professional response. But I need a specific answer regarding financial loss; that’s why I have asked Chatgpt to elaborate on five adverse economic effects of tobacco. Let’s check:
How does Chatgpt write 5 financial consequences of using tobacco?
AI:
1. Increased costs of cigarettes and related products: Smoking is an expensive habit that can quickly add up in terms of frequent purchases of cigarettes and other related products.
2. Reduced life expectancy: Smoking can reduce life expectancy, which means that smokers may have to save more money for retirement due to the shortened time frame.
3. Higher risk of medical treatments due to health issues: Smoking increases the risk of serious health issues such as cancer, heart disease, and stroke, which can lead to costly medical treatments or lost wages due to missed work.
4. Higher insurance premiums: Smokers may be charged higher premiums for certain types of insurance due to the associated health risks.
5. Negative impact on financial goals: Smoking adds costs
Does Chatgpt read my mind? No, provide a traditional response that cannot figure out monetary loss. Just think for a while! Will you understand how tobacco use reduces your earning based on this answer? Definitely no. So, Chatgpt can be a time-saving search engine but can’t replace finance professionals.
How much does the average smoker spend a year?
$1,917 if someone smokes one pack per day for one year. But it is hard to predict the exact amount because it depends on the individual smoking nature, spending behavior & earning amount.
Say, the household income of Oliver is $36,000. Oliver is a light smoker who expenses $4 a day for 1 pack of cigarettes. In one year, he will spend $1460 (365 days×$4). Subsequently, income reduction due to smoking is ($36000-$1460) $34540.
Take another example; Daniel earns $48,000 per year. He is a heavy smoker & needs 2 packs in a single day. If per pack cost is $6, then the total yearly expense will be 730 (2 packs×365 days) pack cigarettes.
So, the yearly smoking cost will be $4380 (730 packs×$6) for Daniel. Accordingly, his income decreases to ($48000-$4380) $43620.
Both examples support the idea that smoking behavior is positively related to income potential. Our spending nature changes with income over time. Therefore, it is hard to figure out the exact amount about how much money a smoker spends per year. Can Chatgpt copy my mind? Let’s see what have Chatgpt ai written:
Chatgpt explains how much does the average smoker spend a year?
AI: According to an analysis by the Centers for Disease Control and Prevention (CDC), the average smoker in the US spends around $1,878 on cigarettes and other tobacco products each year.
However, this figure can vary depending on the type of cigarettes and other products purchased, as well as how frequently they are purchased.
Additionally, this does not take into account any additional costs associated with the health risks posed by smoking.
In this regard, I will agree with Chatgpt. Chatgpt writes an accurate answer with reference. It suggests that Artificial intelligence Chatgpt is very precise regarding facts. As a finance professional, I can use these facts to make a financial estimation. Theoretically, Chatgpt provides accurate information but professionally, no. I was expecting a response proving how smoking habits negatively reduce our finances. Chatgpt fails to read my mind & this is an unprofessional response. Therefore, we can compare Chatgpt with an advanced search engine that can give an instant specific answer for a question without expert finance knowledge.
Concluding thoughts:
Chatgpt is the most innovative innovation right now. It can help finance professionals to do small tasks but can’t provide advanced finance judgment. That means Chatgpt can help you to do better financial analysis if you know how to use them correctly. Chatgpt answers every question that I have asked relating to personal finance. What I have found in every response is a professional finance gap. This gap indicates the incapability to replace certified personal finance and is also unwise to rely on critical financial decisions.
Lastly, the intelligence of Chatgpt surprises me. Sometimes, it copies my mind, but if you want a direct answer regarding the reliability of Chatgpt for personal finance, then as a finance professional, my advice will be not to depend on it blindly.
Frequently Asked Questions (FAQ):
What is the Need vs. want concept in personal finance?
Need vs. want means distributing income first to meet essentials and then for desired items. Necessary items are the needs that help us survive, whereas luxury items wish to upgrade living standards. Wants to make our life comfortable but reduce savings.
For example, Sophia earns $4000 & she spends $3000 on food, rent, utilities, clothing, and insurance, & rest of the $1000 for travel & entertainment purposes. Here, food, rent, utilities, clothing, and insurance fall under essential expenditure. On the other hand, travel & entertainment expense falls under wants because they gave Sophia a luxurious life. Sophia can live without desired items by saving $1000 but quite impossible without fulfilling Need.
So, need is necessary to live where wants are those nonessential items that improve living standards.
Disclaimer
The information provided in this article is just the author’s view & only for educational purposes. By reading this, you agree that the information is not personal finance advice. Do your research before making your smoking plan. Therefore, FinanceIdeas.org will not be liable for your financial loss.
