AI tools can explain complex money concepts in simple terms, helping overcome a common barrier to financial education, one expert says.Feodora Chiosea/iStockPhoto / Getty Images
For many students, artificial intelligence has become the go-to-tool for study help and everyday advice. But the same tools could also teach a skill that pays off long after graduation: financial literacy.
Many university students find themselves navigating rent, living expenses and student loans for the first time. AI tools can help break down complex financial concepts and give them a starting point to build better money habits.
Afsha Butt, founder of Wealthverse, a wealth-technology company focused on financial planning and investment strategy at the intersection of psychology and money, says AI can help build financial literacy by giving people a starting point to ask questions about their money.
“I think AI removes one of the biggest barriers to financial education, which is embarrassment,” Ms. Butt said.
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For many students, financial literacy can feel intimidating. AI creates a private space to ask questions and build stronger money habits. While it doesn’t replace professional advice, Ms. Butt said, it can make financial topics easier to digest and help people learn the basics, so they arrive at meetings with advisers better informed.
The key to getting the most accurate responses from AI is tailoring your prompts with clear details about your situation. Instead of asking broad questions such as “How do I invest?” users should provide context and assign it a specific role.
“Start by prompting it to act as a financial coach,” she says. “That changes the type of response you’ll get.”
Another advantage of AI tools is the ability to experiment with financial scenarios.
One of the biggest barriers to investing is the belief that you need a large amount of money to start. Seeing long-term projections can be particularly powerful, Ms. Butt says.
Instead of relying on general advice, students can now ask questions based on their own situation: their income, spending habits, career goals and financial goals.
“Financial literacy used to mean reading information. Now it can become a conversation,” Ms. Butt says.
While AI can help you learn about personal finance, it shouldn’t be used to make financial decisions on your behalf. One risk is assuming the advice is fully personalized.
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Richard Bank, a certified financial planner at Aligned Capital Partners, says AI can serve as a useful research and learning tool, but it often offers generalized advice without the context of someone’s income, family situation, risk tolerance or long-term goals.
“Treat AI as a starting point and verify important information with trusted sources like qualified professionals, government websites or financial institutions before making decisions,” he says.
Privacy and confidentiality present another risk, as there is no guarantee that sensitive information entered into these platforms will remain protected. Experts warn users not to enter personal details, such as social insurance numbers or tax records into AI systems.
There are also concerns that AI models can generate advice based on incorrect assumptions or outdated information. Ms. Butt recommends asking follow-up questions whenever AI generates financial calculations.
“Ask it what assumptions it used,” she says. “Ask what tax rules it’s applying. That helps you understand where the answer is coming from.”
Despite the risks, AI may offer something the education system has long struggled to provide: a safe space to start learning about money.
“I don’t think AI will replace financial advisers, but I do think it will raise the baseline level of financial understanding for millions of people,” Ms. Butt says.
Here are several prompts students can experiment with, based on Ms. Butt’s advice.
Learn the basics
Prompt: “I’m a university student earning [$X per month] with these expenses [rent, groceries, transportation, bills and subscriptions]. What financial questions should I be asking to better understand my money and improve my financial habits?”
Prompt: “Explain investing to me like I’m 15 years old and just opened my first TFSA in Canada. Break it down in simple terms.”
Prompt: “What are the most common financial mistakes people make in their 20s and how can I avoid them?”
Understand your spending
Prompt: “Act as a financial coach. Based on these monthly expenses, help me identify where I may be overspending and suggest ways I could reduce my spending.”
Prompt: “Act as a financial coach. I have these debts [balances, interest rates and minimum payments]. Help me design a realistic strategy to pay them down faster.”
Create a financial plan
Prompt: “Based on my current income and expenses, help me build a three-month emergency fund within [X months].”
Prompt: “If I invest $300 or $500 a month starting at [age X], what could that realistically grow to by retirement assuming long-term market returns? Show the difference if I waited five years to start.”
Forecast your financial future
Prompt: “If I keep earning, spending and saving the way I currently am, what might my financial situation look like in [X years]?”