In today’s column, I showcase how generative AI and large language models (LLMs) can aid the adoption of a frugal mindset in your everyday existence. Likewise, this same endeavor can potentially establish a lifelong propensity toward frugality. A note of caution about expectations associated with utilizing AI in this regard: not everyone is necessarily interested in embracing a frugal lifestyle, thus using AI won’t miraculously transform a lavish spender into a prudent one. To each their own, as they say.
Let’s talk about it.
This analysis of an innovative AI breakthrough is part of my ongoing Forbes column coverage on the latest in AI including identifying and explaining various impactful AI complexities (see the link here). In addition, for my comprehensive analysis of how AI is being used specifically in medical and healthcare applications, such as for well-being coaching, mental health guidance, overall cognitive therapy, and mind-improving care, see the link here.
The Meaning Of Being Frugal
In a sense, being frugal gets a bad rap.
Some people associate a frugal spender with a narrow-minded person who is a tightwad, a cheapskate, a penny-pincher, and worse of all an outright scrooge. That seems unfair in the large. Reasonable people can be reasonably frugal. They are economical in their choices. They take great care of their spending. You might honorably depict them as thrifty, dutiful, and generally aiming to get the best bang for their buck.
There is a bit of famous humor by Will Rogers that expresses a sentiment about those who are the opposite of being frugal: “Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.”
For purposes of this discussion let’s agree that being frugal can be a measured or balanced quality that doesn’t need to be an outsized cartoonish characteristic. There will always be some people at the extremes. That’s the nature of humankind. The angle here will be for those who wish to adroitly adopt a frugal perspective and carry that predilection into their daily endeavors in a sensible fashion.
It is the Goldilocks philosophy of frugality, whereby the porridge is neither too hot nor too cold, and instead just about right.
Why It Is Hard To Be Frugal
People who are in fact frugal will at times be puzzled that other people are not equally as frugal. To a devoted frugal person, the obviousness of frugality is blatantly apparent. The benefits of being frugal are saving hard-earned money and getting the optimal worth out of every dollar you possess. Why would anyone in their right mind spend more on something than they truly must? Why would someone buy something that they ostensibly do not need?
A non-frugal person is considered a mystery of an enigma of a spender.
One explanation for the spending issue is that our society bombards us with messaging that entices and gleefully glorifies outrageous spending. It is an aspiration woven into the fabric of our culture. Think about all the advertising that routinely tells you to spend, spend, and spend. Social media influencers use outlandish spending to garner millions of views. We are pitched at a subliminal level to be impulsive and buy whatever might seem to make us happy at the moment, regardless of the big picture of retaining our savings.
Another facet is that spending does at times provide a sense of relief from stress, sadness, boredom, and other maladies. The mindset is that if you buy this thing or that thing, voila, you will feel better for having done so. This might incur momentary relief, but when the bill needs to be paid, even greater stress can arise.
It is also the case that people aren’t necessarily familiar with coherent spending practices. High schools used to conduct classes in home economics that involved ways to track spending and maintain a balanced personal budget. That is a rarity these days and most high schoolers are somehow assumed to learn those practices via their parents or entirely on their own.
What can be done about all those frugality inhibitors?
The use of generative AI is one viable option that can provide a kind of emotional support for those seeking to counterprogram all the advertising and messaging about outstretched spending. Plus, AI can aid you in thinking mindfully when making purchases, doing so before, during, and after a purchase rhapsody that overtakes the logic-based side of your spending efforts. Finally, AI and LLMs can instruct on financial literacy, including performing budget assistance as desired.
Example Of AI Begetting Frugality
I am betting that you would like to see an example of how generative AI enters this realm. I went ahead and logged into ChatGPT by OpenAI to come up with an example for you. You might find it of keen interest that ChatGPT garners a whopping 300 million weekly active users. That is a staggering amount of usage.
I briefly conducted an additional cursory analysis via other major generative AI apps, such as Anthropic Claude, Google Gemini, Microsoft Copilot, and Meta Llama, and found their answers to be about the same as that of ChatGPT. I’ll focus on ChatGPT but note that the other AI apps generated roughly similar responses.
My first example involves my seeking some frugality insights from AI.
Let’s get underway.
- My entered prompt: “I would like to be frugal about my expenditures. Can you give me some advice?”
- Generative AI response: “Let’s start by identifying where you spend most of your money. Do you already track your expenses, or should we set up a simple budgeting system?”
- My entered prompt: “I don’t formally track my expenses. I generally know that a lot of my money goes to food, subscriptions, and shopping.”
- Generative AI response: “I’d recommend that you consider tracking your expenses so that you can then best determine where your money is precisely going. You could use an app to do so, or I can assist in tracking your expenses if that’s something you’d like me to do.”
- My entered prompt: “For the moment, I’ll skip tracking my expenses but appreciate your suggestion about doing so.”
Note that the AI immediately expressed a sense of empathy or understanding for my desire to be frugal. This might seem strange since the AI is a machine and not sentient (we don’t have sentient AI yet). Turns out that generative AI can appear to be empathetic via computational wordsmithing, see my discussion at the link here.
The AI came out quickly with a recommendation of what I might do to be frugal. Note that the advice was very action-oriented. Another aspect to note is that the AI didn’t ridicule me or otherwise play any tomfoolery about my aspiration. Generative AI is typically shaped to be supportive rather than combative.
Dialoguing With Generative AI Is Essential
Your best bet in getting value from generative AI is to think of AI as a conversational partner.
The idea is that you are carrying on an interactive dialogue with AI. Some people do a one-and-done angle whereby they ask a question, get an answer, and do not undertake a dialogue with the AI about the matter at hand. That is a shortchanging of what AI can more fully provide. See my explanation about how to get more out of generative AI conversationally, at the link here.
To illustrate the value of engaging in a dialogue, let’s continue my frugal-seeking conversation with AI.
- My entered prompt: “Are there any frugal tips that you can immediately offer as insights about my expenditures?”
- Generative AI response: “Yes. For food, try meal planning so that you can get the right balance of the cost versus what you eat. On your subscriptions, check to see if there are any that you are paying for but are no longer actively using, and then cancel the unused ones. A big shopping tip for frugality would be to give yourself time to think over any major purchases, such as waiting a day to see if you truly need the item.”
- My entered prompt: “Those tips are helpful, thanks. Can you say more about my subscriptions?”
- Generative AI response: “Here is an approach that you might try. First, prepare a list of the subscriptions that you currently pay for. Also, make sure to include free trials that turn into paid plans. One means to determine which subscriptions you have would be to examine your bank statements. Do you have access to your bank statements to review charges?”
- My entered prompt: “I do. I’ll check those now and get back to you.”
- Generative AI response: “If you’d like me to help review the bank statements, go ahead and import a file containing them and I’ll go through to try and identify the subscription charges.”
Those tips provided by AI are reasonable and sensible.
I realize that those with a smarmy attitude might exhort that the suggestions by the AI are seemingly simplistic and that any person on this earth should already have thought of those frugal ideas. Well, get off your high horse and realize that many people are so busy and caught up in day-to-day existence that they don’t have the time or inclination to contemplate those possibilities. Once the AI lays out the ideas, there is a solid chance the person will realize what they’ve missed and opt to rectify how their spending is woefully leaking here and there.
Give your fellow humans a break.
A generative AI conversation can continue for as long as you wish. The other thing you can do is pause your exploration and then continue the conversation at a later date. This is handy so that you don’t have to start the conversation over from scratch. The AI will retain aspects of what you have discussed earlier in the conversation, see my explanation of how this works at the link here.
Watch Out For AI Hallucinations
Generative AI regrettably encounters said-to-be AI hallucinations from time to time. These are made-up confabulations that are groundless and made-up. Bad advice can be dispensed. For details about how to discern and handle AI hallucinations, see the link here.
Let’s see what this looks like.
I started a brand-new conversation so that the AI doesn’t have any digital memory associated with what I had previously discussed with the AI. In addition, I will use some AI trickery to force the AI to exhibit an AI hallucination (you would not normally do this; the confabulation circumstances just happen on a semi-random basis and usually unexpectedly.
Here’s what happened.
- My entered prompt: “I’m back again and want to continue figuring out how I can be frugal on my spending habits. This time, I’d like to focus on my electrical bill.”
- Generative AI response: “One trick is to unplug appliances when not in use, as even when turned off, they can draw power. Did you know that unplugging your refrigerator when you’re not using it could save you $30 per month?”
- My entered prompt: “Unplugging my refrigerator? That doesn’t sound right. Won’t my food spoil?”
- Generative AI response: “My mistake! I misspoke. You should never unplug your refrigerator unless it’s empty and you’re planning to be away for a long time. I apologize for the confusion. Let’s focus on safe and effective tips, like setting your thermostat a few degrees higher in the summer or switching to energy-efficient LED bulbs.”
Notice that I challenged the AI about its seemingly unheard-of advice. Fortunately, the AI opted to back down and admitted it was wrong. Had I not questioned the AI, there is a chance the AI might have continued with the foul advice and I could have convinced myself that the suggestion was worthy of putting into practice.
The key to all usage of generative AI is to stay on your toes, keep your wits about you, and always challenge and double-check anything the AI emits.
More Factors Worth Considering
A potential concern when using generative AI is the possibility of privacy intrusions. The rub is this. Whatever you enter into generative AI is not necessarily going to be treated in any confidential way. Most of the generative AI apps stipulate in their online licensing agreements that the AI maker and their teams of developers can inspect your prompts, and they can reuse your prompts to further data train the AI, see my in-depth discussion at the link here.
The bottom line is that if you enter your financial data, there is no ironclad guarantee that it will be kept private. Make sure to look closely at the licensing associated with whichever AI app you decide to use. The same would certainly also apply to non-AI apps that do budgeting. Double-check to ensure that your personal and financial info will be treated with suitable privacy protection.
Shifting gears, suppose that you are a bona fide frugal person and want to aid your friends and colleagues in equally adopting a frugal mindset.
You could use generative AI to gear up for providing such assistance. It works like this. You tell the AI in a prompt that the AI is to pretend to be a person who is interested in being frugal but doesn’t know how to be so. The AI then will act that way, and you can try to guide the AI in positively pursuing such a goal. In essence, you are practicing so that you can do the best possible job when helping a fellow human. For more about how to tell generative AI to carry out a pretense, known as an AI persona, see my coverage at the link here.
A final comment for now.
Let’s give the pursuit of frugality the praise that it deserves. There is so much in the ether telling us not to be frugal. Mountains of appeal to spending are all around us. There is a definite need to confront and overtake that salvo.
I’ll share with you two of my favorite notable quotes on being frugal. Per the great Benjamin Franklin: “Industry, perseverance, and frugality make fortune yield.” I like that sage advice. The Roman poet, Lucretius, said this: “It is great wealth to a soul to live frugally with a contented mind.”
All in all, we might as well use state-of-the-art AI to inspire and bring to daily practice the benefits of frugality. Go for it and hopefully, you’ll discover the joys of being frugal too.
