We asked ChatGPT and a financial adviser: How should I prepare for a financial recession?
Economists have predicted that the US will enter a recession at some point in 2023, and there are signs of weakness in the economy. To prepare for the possibility of a recession, we asked the latest version of ChatGPT, an advanced artificial intelligence platform, for its recommendations on the best ways to prepare financially. We also asked a financial advisor, Catherine Valega of Green Bee Advisory in Boston, to critique ChatGPT's response and offer her own advice.
Preparing for a Recession
ChatGPT recommended the following steps to prepare for a recession:
- Have an emergency fund of 3-6 months of living expenses
- Prioritize paying down high-interest debt
- Diversify investments
- Consider ways to increase your income
While these are solid recommendations, Valega pointed out that ChatGPT's advice is not personalized to each individual's unique situation. For example, freelancers, seasonal workers, or those in higher-risk industries may need a larger emergency fund to weather potential job loss. Additionally, ChatGPT's advice on paying down debt may not be optimal for those with low-interest mortgages. Valega suggests that individuals work with a financial advisor to create a plan tailored to their specific needs and goals.
The Role of Artificial Intelligence in Financial Planning
While ChatGPT is a useful tool for providing a general understanding of financial concepts and offering basic advice, Valega emphasized the importance of personalized advice from a human financial advisor. Understanding an individual's unique relationship with money is crucial in creating a financial plan that meets their specific needs and goals.
If you are looking for generic advice or a starting point in your financial planning journey, ChatGPT can be a helpful resource. However, it is important to fact-check any information obtained and work with a financial advisor for personalized guidance.
In summary, preparing financially for a potential economic downturn is always a good idea. While ChatGPT's recommendations provide a starting point, it is important to consider your own unique situation and work with a financial advisor to create a personalized plan. By being proactive and taking steps to protect your financial future, you can be better prepared to weather any financial challenges that may arise.
