Projects vs Folders in ChatGPT and Claude (November 2026)

Most people have one long list of AI chats about everything, and every new chat starts from scratch. You explain the background again, paste the same document again, and lose the answer you got last week somewhere in the list.

There are two fixes: Projects in ChatGPT and Claude, or folders on your computer. I run my business out of folders. This guide covers projects vs folders in plain English: where each one keeps your stuff, what the AI does with its own work, and the rule I use to pick.

The short answer

If what you want back is an answer or a conversation, use a Project. If it's files you'll keep working on and changing, or files you want to own, use a folder. Most people starting out should start with Projects, and they're free.

Where your stuff lives

This is the simplest way to think about it, and everything else follows from it.

A Project lives in ChatGPT or Claude, in your account, online. A folder lives on your computer where it already is, and the AI works inside it.

Here's the full video if you'd rather watch:

How I use folders

All of my projects are folders on my Mac. There's one main folder called AI Sandbox (don't ask), and inside it there's a folder for each thing I'm working on: one for my newsletter, one for my YouTube videos, and at work, a folder for each client of my marketing agency with the projects we're doing for them inside.

Every folder has a file of instructions in it. It's a plain text file, usually called CLAUDE.md or AGENTS.md, and the AI reads it automatically every time I start working there. So when I'm in my newsletter folder, it already knows who reads the newsletter, how I write and where everything lives, before I've typed a word. If you want your own writing rules in that file, my guide to making AI write like you shows how.

My favourite part is what happens next. When AI works in a folder, it writes real files into the folder as it goes: drafts, notes, where we got up to in the session, and the business decisions it helped me make. I can close my laptop and come back a day or a week later, and it reads those files and picks up exactly where we left off. The memory for that project never runs out, because it's on my computer.

I mostly do this in Claude Code and Codex, but you don't need those anymore. The normal Claude and ChatGPT desktop apps can work in a folder on your computer too: you pick the folder and give it permission. My guide to setting up AI on your computer walks through it in about 15 minutes.

You're not tied to one AI company

The other reason I love folders: they're my files. They're not stuck inside Claude, ChatGPT or Codex.

So I can work on the same folder in Claude Code one day and in Codex the next, and both read and write the same files. If something drastic happened and I couldn't use a particular AI company anymore, my folders would still be mine. I could point a different model, even an open source one, at the same files and pick every project up where I left it.

That's called being model agnostic, and it's one of the main reasons I work this way.

The catch with folders

They live on your computer. My phone can't see them, and nor can my other laptop, unless I sync them or use the remote control feature in Claude Code or Codex. I made a separate video on running AI agents from your phone if that's what you're after.

My fix is GitHub. If you haven't used it, think of it as Google Drive with an undo button. Every time something changes, I push the folder up to GitHub, so it's backed up and I can get to it from any machine. Don't let that put you off if it sounds like a lot. You can start without it.

How Projects work in ChatGPT and Claude

Projects are in both ChatGPT and Claude, and they're on the free plans. Claude's free plan lets you have up to 5 (Anthropic's guide to Projects).

Because a Project lives in your account, it's on your phone, your laptop and the website all at once, with no syncing.

Each Project keeps your chats about one thing together. It has its own instructions, a few lines the AI reads in every chat, and you can upload files for it to refer to: a mortgage offer, a holiday itinerary, a letter from your GP.

It also remembers what you've talked about in that Project. In ChatGPT, a chat in a Project can use the other chats in the same Project. In Claude, each Project has its own memory.

The big difference: who saves the work

This is the bit that took me a while to see.

In a normal Project, the AI doesn't save its own work back into the Project. If it writes you a document, that document stays in the chat, and you add it to the Project yourself if you want it kept. In a folder, it saves everything as it goes.

Claude is starting to close that gap. A new version of Claude Projects is rolling out with a Library that collects the files you add and the files Claude makes, a memory that writes itself, and work that carries on in the cloud after you close your laptop. So far it's for some paid users through Claude Code, but I think this is where all the apps are heading.

My tip: get the best of both

In the Claude and ChatGPT desktop apps, you can point your work at a folder on your computer. You get the instructions and chats of a Project, and the AI saves its work into a folder you own. If you have a laptop, that's the setup I'd aim for.

Projects vs folders at a glance

Which should you use?

Here's the rule I use. If what you want back is an answer or a conversation, use a Project. If it's files you want to keep working on and changing, or files you want to own, use a folder.

For most people starting out, that means Projects. One for moving house, one for health admin, one for a holiday or a side project.

If you're building things, like websites, documents or anything you'll keep coming back to and changing, that's when folders come into their own.

How to set up a Project

In ChatGPT: click New project in the sidebar, give it a name, then add your instructions and files from inside it.

In Claude: click Projects in the sidebar, then New Project, and give it a name. Click Set project instructions to add yours, and add files with the plus button.

Not sure what to write in the instructions? Get AI to interview you. Open a normal chat and paste this:

I'm setting up a project for moving house. Interview me one question at a time, then write instructions for it.

Swap "moving house" for whatever your Project is. Answer its questions, then paste what it gives you into the Project's instructions.

The memory setting worth knowing

In ChatGPT, you can set a Project's memory to Project-only in its settings, so it only uses chats from inside that Project.

In Claude, if you want a Project kept completely separate, say for health stuff, turn off Use account memory on that Project's page.

Try this this week

Make one Project for the part of your life that's taking up most of your head right now, and give it a couple of lines of instructions.

If you're ready for the next step, make a folder for one area of your work, put an instructions file in it, and point Claude or ChatGPT at it from the desktop app. See how much easier it is to pick things up from there.

Questions people ask

What's the difference between a Project and a folder in AI?

A Project lives in your ChatGPT or Claude account online, so it's on every device at once. A folder lives on your computer and the AI works inside it. In a folder the AI saves its work as files; in a normal Project it stays in the chat.

Are Projects free in ChatGPT and Claude?

Yes, both have them on the free plans. Claude's free plan allows up to 5.

Do Projects remember previous chats?

Yes. In ChatGPT a chat in a Project can use the other chats in it, and in Claude each Project has its own memory.

Can AI save files into a Project?

Not in a normal Project. Claude's new Projects, rolling out to some paid users through Claude Code, add a Library that collects the files Claude makes.

Can I see my folders on my phone?

Not on their own. Sync them, use remote control in Claude Code or Codex, or back them up to GitHub like I do.

How do I keep a Project private from the rest of my AI memory?

Set its memory to Project-only in ChatGPT, or turn off Use account memory on the Project page in Claude.

What's next

I share one AI setup like this every Sunday in The Growth Toolkit, the ones I use in my own business, with the prompts and steps to copy. If you've got Projects or folders set up, my six agentic AI examples are good first jobs to give them, and every prompt I use is in my prompt library.

Mike McDonnell. I write The Growth Toolkit, a free Sunday email on making more profit with AI, with the setups I use in my own business explained in plain English.