How might we educate young adults on the importance of establishing credit?
Establishing and building good credit is essential to achieving financial success in life, but young adults (age 18–25) lack an understanding of credit, its importance, how it works, and how to build it. This absence of knowledge can lead to poor decisions and mistakes, resulting in a less than excellent credit history and debt, leading to long-term financial problems.
For seven weeks, I worked remotely with two other designers to better understand young adults and how they learn about credit to help them make better financial decisions while they’re young to be set up for financial success in the future.
The Inspiration
We kicked off our research by conducting eight user interviews. These interviews involved young adults (ages 17–24), parents of young adults, and experts in the financial world, including a UX team with experience performing financial wellness reviews and financial advisors from bank branches.
In addition to our user interviews, we surveyed 21 participants, ages 18–34.
The Insights
From our interviews and survey, we noticed three significant themes regarding people’s financial literacy and knowledge of credit; how people learn, what they need to know, and roadblocks to learning.
Survey result, 21 adults (ages 18-34)
How People Learn
Through Experience
People learn as they go, by making mistakes, or when they need to apply for a loan or credit card.
From other people
People learn through observation and conversation with people who are significant in their lives (parents, friends, mentors, etc.).
In formal settings
Some people learn best in a formal classroom or workshop setting.
How might we…?
Educate students at school better? Start earlier?
Do you help parents teach their children about money?
Survey result, 21 adults (ages 18-34)
What people need to learn
How to use credit cards properly
People can positively use credit cards to build credit for the future without getting into debt.
How to make credit cards work for them
Credit cards can benefit from cashback, travel points, and other rewards.
Why having credit matters
Knowing why you should start building credit while you’re young for future goals (buying a house or car, going to college, etc.)
How might we…?
Teach people how to make credit cards work in their favor?
Present complex information in easily digestible forms?
Survey result, 21 adults (ages 18-34)
Roadblocks to learning
Personality type
People can be taught the same lesson but learn something completely different depending on their personality type and learning style.
Access to resources
Not everyone has the same formal education or parents who actively teach them finance lessons as they grow up.
“You don’t know what you don’t know.”
How is one supposed to know what they need to know before they need it?
How might we…?
Do you help people realize what topics they need to learn about regarding money?
Factor different personalities into finance lessons?
Get in front of users before they need a loan or realize they don’t have the credit or good credit?
We designed a survey to help us create a personalized experience for the user. Starting by gathering demographic information and information about their financial status.
The Pitch
Many financial apps and articles are saturating the market, and it can be daunting to figure out where to find the information needed for one’s current circumstance or help with goals. So we developed a service that curates personalized recommendations based on current financial status and knowledge, short and long-term goals, and learning style using our research findings.
After gathering information via an initial survey, users go to a customized dashboard with app recommendations, article links, information on available courses, and other learning tools. Periodically we will check in to keep goals and pertinent information up-to-date.
Further questions revolve around learning style, current knowledge and any short or long-term financial goals.
After completing the survey the user will be presented a dashboard of personalized articles, apps, and other items to help educate them to get closer to their goals.
The Takeaways
1. People don’t learn about credit until they need it.
Teaching people how to use credit cards properly before opening their first card can instill good habits and prevent future mistakes.
2. Parents are the most trusted source of financial advice.
Helping parents teach their kids about finances from an early age will set them up with a healthier financial foundation, which gives them a better chance at financial success.
3. Personalized information is the best way to reach someone
If we’re talking to a person precisely, they’re more likely to pay attention and understand what we’re telling them.