Financial Literacy. Thesis - Prototyping

Transcription

1 Financial Literacy Thesis - Prototyping Michael Gingras Doug Whitton January 8th, 2018

2 Table of Contents Prototype Recap 1-2 Financial Basics Teacher 1 Finance Tracking Tool with Tips 2 Prototyping - Financial Teacher 3-11 Session Length 3-6 Lesson Flow 7-11 Prototyping - Financial Tracking Student Debt Visualization Savings Visualization Prototype Timeline 20

3 Prototype Recap A recap of the two prototypes selected in the previous phase to move forward with. These are directly from the last document.

4 Financial Basics Teacher A step-by-step financial teacher that focuses on core concepts of financial health. Platforms Needs / Opportunities Poor General Understanding Financial Confidence Mobile Poor Current Learning Opportunities Desktop How It Works The most prominent concept from brainstorming was a product that supplies the core fundamentals of finance to young adults in Canada. It would follow a structure of small packs, that offer small amounts of information each day, building on the last day s teaching. The core focus would be financial basics; creating a monthly budget (and how to stick to it), detriments of overspending, interest rates, account management, to name a few. Individuals could work through as much as they please, but the goal would be to complete a lesson each day. Each lesson would aim to be 5-15 minutes. This would be ideal if it could offer some basic tracking tools as well, but that would be a secondary implentation. Prototype Learning Outcomes The key understanding is to help determine what structure would help people learn best. The small chunks each day seems proven (Duolingo, Headspace) but seeing how this translates to finance is important. Also, what amount of info each day would also be very important, to teach as much as possible without boring people. 1

5 Finance Tracking Tool with Tips A budget tracker that has a wealth of tips and best practices for spending and saving. Platforms Needs / Opportunities Financial Complexity Overspending Mobile Can Tailor to Situation Desktop How It Works It would be something similar to what s currently found on the App Store; a detailed tracker that manages incomes and expenses. The value proposition here would be additional tips and best practices that make sense of what information you re putting into it. Ultimately, it would also offer greater insight into the money coming in and out. Data visualizations and trends would help clarify spending habits, especially long-term ones to identify key saving areas. This focuses more on increasing understanding of the individual s current state of saving and spending, as opposed to a teaching angle. Prototype Learning Outcomes This prototype aims to learn what information is most relevant to helping people understand their own habits. What kind of visualizations are useful, if long-term habits benefit understanding, and what areas tips and best practices would be most utilized. 2

6 Prototyping Financial Teacher This section includes all of the initial prototyping for the financial teaching concept. This includes plan, materials needed, learning outcomes, and other details.

7 Prototyping - Financial Teacher Session Length A/B Testing between two sample lessons, of varying length. One will be 5 minutes, and one will be 10, attempting to cover the same content. Prototyping Method Platform for Testing: This prototype will A/B test between two versions of a sample lesson, in this case, compound interest. A. 5 Minute Lesson The five minute lesson will comprise of less information, but still attempt to cover the same extent of content (simply in less detail). Mobile A. 10 Minute Lesson The ten minute lesson will be more detailed, offering a little background where necessary, and explain certain elements in greater detail. Both will follow a similar flow, and may vary from exactly the time aimed for, as it will be up to the user to go through it at their own speed. Testing Structure: A/B Testing Learning Outcomes The main goal of the prototype is to understand what length of time is ideal. The balance between enough information given, but not being too long is crucial. People have to feel confident in what they learned, but also come back the next day. Material / Form: There s also the secondary learning of the overall structure of the lesson; this will be covered separately in it s own test, but this will also offer some insight. The outcomes will be measured through observation throughout the testing, as well as questions following the procedure. 3 Paper Prototyping

8 Prototyping - Financial Teacher Expected Outcomes I expect the shorter lessons will be more valued; finance is math heavy and complex, so it ll likely be better in shorter bursts. This also very likely will lead to a second prototype to determine how much content is ideal per page; is ten pages of less content, or 4 pages full of content better? Materials Compound Interest Lessons The five minute lesson will comprise of less information, but still attempt to cover the same extent of content (simply in less detail). Calculator A calculator may be desired, as the paper won t be able to do any math. Post-Session Questions On the topic of prototype A, On the topic of prototype B How confident do you feel about your understanding of compound interest after the lesson? 1. a. Would you feel more confident if you had an aid (such as an application) to help with a specific compound interest situation? 1. b. (If low confidence) What is the main obstacle of a higher rating? 2. How would you rate your engagement with the lesson? 2. a. (if low) What was unengaging? Is there something that would help create more interest? 2. b. (if high) What are some of the most engaging parts? 3. Could you see yourself returning each day to learn more? Why or why not? On the topic of both prototypes Which prototype did you find more enjoyable overall? Why? 2. Do both prototypes feel appropriate for a mobile device? Why or why not? 4

9 Prototyping - Financial Teacher Materials (Visual) These are relatively small (on the page) for the sake of page brevity. This path is for the full ten-minute lesson, and those indicated with a green dot in the bottom-left corner are the five-minute lesson (In some cases, two screens will be consolidated into one, with less information). That s Okay! Today, we re going to learn about COMPOUND INTEREST If low rating We re going to cover everthing you need to know in the next few days. What s Compound Interest? Compound interest (CI) is the way in which interest is accumulated on an amount of money. It s often simply called interest. You ll see an interest rate on various financial products, such as any investments or savings accounts. Your credit card also has an interest rate. Do you know what yours is? Sounds fun! I sure do! I do not... How confident are you with compound interest? 1 Great! 10 If high rating Then this will hopefully be a nice refresher, or maybe you ll learn something you didn t quite know before. I don t have a credit card I d prefer to skip this lesson What s Compound Interest? Compound interest (CI) is the way in which interest is accumulated on an amount of money. It s often simply called interest. Time! The most important influencer on interest is time. Say what? You ll see an interest rate on various financial products, such as any investments or savings accounts. Your credit card also has an interest rate. Do you know what yours is? That s because interest is exponential. If you took math in high school this may be familiar to you. If not... Why is CI Important? 19.99% Is a very common rate among credit cards, but it can be even higher. Interest determines the rate at which your investments or debts grow. A high interest rate means it grows very fast, while a low interest means it grows slow. Interest is arguably the single most important aspect to financial awareness. It can send you into very bad debt if not managed, and it can also earn your retirement savings if managed well. But what makes interest so important? 5 Oh Boy, Math... Exponential means the growth rate increases as time progresses. So it might mean $100 on an investment the first year, and $200 the next! But instead of explaining a bunch of math, let s work through an example instead. ( d on next page )

10 Prototyping - Financial Teacher Let s Make More Money! Let s Make Some Money! Let s say you make an initial investment of $100. We ll keep it for a year with an interest rate of 5%. Initial Investment: Interest Rate: Term: $100 5% 1 Year After one year, you ll have your $100 with an additional 5%, totalling $105. 5% of $100 = $5 $100 + $5 = $105 This is a pretty simple scenario, and they can often get more complex. We ll look at something more common on the next page. In the case of investing, it s unlikely to make an initial investment and never add to it. This is where it can become a little more complicated, but let s take another example. The interest this time is 6%. $100 $20 6% 1 Year Initial Investment: Monthly Investment: Interest Rate: Term: It s typically easiest to determine specific earnings with an interest calculator, because for the first month you re earning on $100, then the second on $120, and so forth. Compounding Frequency If the interest compounds bi-annually, this means after 6 months you d receive a payment. Since you re halfway through the annual interest rate, you d receive half the 5%, so $2.50 in this case. So this means you re earning interest on $ for the second half of the year! After 6 Months: 2.5% of $100 = $ After 1 Year: 2.5% of $ = $ Now, these previous examples assume the interest compounds annually. However, it can vary, so let s use the first, simpler example on the next page to understand compounding frequency. Six Cents? Really? So this may seem negligable, because the difference of an annual or bi-annual here is a mere six cents. However, credit cards often compound monthly, or sometimes even daily! An unpaid purchase on a credit card may become much more expensive quick! Take a look at this example: Initial Purchase: Interest Rate: $ % For the sake of this example, we ll assume you do nothing with it. After a year, how much do you owe? If it s compounded... Annually: $ Monthly: $ Student Debt Maybe you or someone you know has a chunk of student debt. Interest adds up fast! Let s see how it affects an OSAP loan based on all the current averages: Interest as Debt One $500 purchase may not be so terrible if left for a year. However, larger sums of debt can grow even quicker, and you must be careful about leaving payments on your credit card! The average Canadian has approximately $4,000 in credit card debt. That could be $500 - $600 in interest a year! $310 a Month... $26,819 Money Total: So if you re paying $310 a month for 9.5 years... (114 months) $310 x 114 = $35,340 Whoa! So for the $26,819 you received, you have to pay back $35,340! That s $8,521 more that you re paying, than you received. Could you use an extra $8,500? Probably! Money Paid in interest: $8,521 Repayment Term: (OSAP has an interest calculator found here, which all of these examples use) Using the OSAP loan calculator, it will tell you your average monthly payment: $310 Hey, $310 a month isn t that terrible! But let s do a little math and see the total! Remember, the average debt is $26,819, so that would be total you received as money. OSAP Interest Rate: Monthly Payment: $ Daily: $26, % 9.5 Years Student Debt: But, What do I do? Congratulations! Does this mean you can t take OSAP to go to school? No! Loans are often necessary and can be very helpful, like in the case of OSAP. You ve just finished your lesson on... The goal here is to be aware of the interest cost, and to do the most you can to reduce your debt fast. Instead of taking a costly trip, for example, put that towards your debt, and it ll save you that money by the end of your payments anyway! Consider paying your debt in half the time (4.75 years,or 57 months): $548 Monthly Payment: COMPOUND INTEREST Come back for your lesson tomorrow on... The Basics of Investing $548 x 57 = $31,236 Money Paid in Interest: 27 $4,417 $8,521 - $4,417 = $4,104 $4,100 in difference? There s a nice trip right there! Staying on top of your debt is the most important to pay as little as possible. 6 Compound Interest lesson star earned 8 Finish Total lessons completed Day lesson streak

11 Prototyping - Financial Teacher Lesson Content & Flow Determining the overall flow of lesson, and what information works best. Also, determining how much information per page. Prototyping Method Platform for Testing: A lesson to create a budget plan will be followed, with the participant given the goal to successfully create a budget plan with the given information. There will be two different sets of given information, with different parameters, to see how the lesson is for both those who spend more, or tend to save. The flow will follow similar to the first prototyping session. This prototype aims to address content, flow, and clarity of the given lesson. Mobile Testing Structure: Learning Outcomes The main goal of the prototype is to ensure that the lesson structure is easy to follow, and provides the corrent amount of information. Each page will neither overwhelm the user, or offer so little content they must click endlessly to get through a lesson. Prototyping Flow Is this lesson easy to follow, and easy to complete? Finally, it also aims to determine the best mix of content (words, visuals, etc) to portray the given information in the most interesting way. Finance is not very visual, but graphs and data visualizations are very relevant. As well, how can utilizing typography, and varying sizes and weight create interest in what would otherwise be a block of text? Material / Form: Paper Prototyping 7

12 Prototyping - Financial Teacher Expected Outcomes Ideally this lesson is easy to follow and the participants have no difficulty creating a monthly budget. Further, I suspect the greater variance of words, visuals and data visualizations will help retain interest and make the lesson more enjoyable. My main concern with a financial teacher is crafting the information into engaging, informational lessons. To know the content is only half the battle, and each individual learns different at different rates, and crafting effective lessons may be beyond scope. Materials Monthly Budget Lesson The lesson will guide participants through crafting a monthly budget with their given information, as well as strategies to stick to the budget. Calculator A calculator may be desired, as the paper won t be able to do any math. Budget Information All required budget information will be supplied as small paper cut-outs. Post-Session Questions On the topic of completion What areas did you find difficult to understand or complete, if any? Why? 2. Where there any specific sections that you found very easy to understand? 3. Do you prefer more pages with less information, or less pages with more information? Why? 3. a. Do you feel this makes a large impact on your interest in the lesson? 3. b. Do you feel this makes a large impact on how much you learned from the lesson? On the topic of information Did you find this to be a good balance of visuals and text? Why or why not? 2. Are there any representation you did not see that you feel would be helpful? 3. Is there any information that was missing that you would like to see? 8

13 Prototyping - Financial Teacher Materials (Visual) - Lesson This is both the monthly budget lesson flow, as well as all of the information cut-outs that will be given to the participants to fill into the lesson when it requires such. That s Okay! We re going to help you set one up today, and give you some tips to follow it. Today, we re going to put together a MONTHLY BUDGET What s a Monthly Budget? A monthly budget helps organize the money you have coming in, and the money going out to ensure that you don t spend more money than you re making! Why is it Important? Without a monthly budget, it s easy to be unaware of how much you re spending, and this can end you up with some debt! A monthly budget will help you keep an income surplus, which you can use to invest, save for a rainy day, or maybe save up for that trip or big purchase you ve been wanting! Have you ever put together a monthly budget? Yes No Great! Then this will hopefully be a nice refresher, or maybe you ll learn something you didn t quite know before. I d prefer to skip this lesson How do I Make a Budget? Making a budget is a pretty straightforward process. We ll list the steps for you below, but don t worry, because we ll take you through each step of the way! 1. Determine work income 2. Determine all other incomes 3. Determine consistent monthly expenses (phone pill, rent, etc). 4. Estimate other expenses (food, clothing, entertainment, etc.) 5. If necessary, balance until you have more income than expenses 1. Determine Work Income Whether you re on salary or hourly, you likely have a relatively steady source of income. We start with income to have a frame of reference for what we re working with. If you know your weekly / bi-weekly net pay, then that s best, as it includes all deductions. Otherwise, enter in your hourly rate, or salary (and we ll deduct based on averages). 2. Determine all other incomes Now we determine any other sources of money you may have. Maybe you rent out part of your house, or have a second job. Go ahead and put in any extra sources of income. If you don t have any, just hit continue and we ll move right along. Hrs/week Hourly Rate Add a Second Job OR Salary Add another income OR Weekly / Bi-weekly Net Pay 9

14 Prototyping - Financial Teacher Calculating Fixed Expenses The first expenses you want to calculate are fixed expenses, as these will be consistent month over month. Some examples may be rent, or a phone bill, for example. Excellent! Once we have the fixed ones down, we ll estimate some other expenses. How much do you spend on clothes? This would be an example of a lifestyle good. How about entertainment? How you decide to categorize certain things is up to you. For example, is food only groceries? Or is eating out included? At this point, this should be all of the money you have coming in for the month. Nice! $ Total Monthly Income: Calculate Other Expenses Rent Food Assuming this is all correct, let s go ahead to the less fun part: expenses. Phone and Internet Lifestyle If this isn t quite right, just change whatever information is wrong, or missing. Utilities Entertainment Other Other This info isn t quite right Uh Oh! Looks like you re spending a little more than you re making! The best idea here is to look back at your expenses, and determine an area you can cut back on. Savings A good rule of thumb is to aim for around 10% to 15% income surplus, which you can contribute towards your savings. This may be retirement, or an emergency fund. Fixed Expenses Excellent Work! Other Expenses We re all set up with a monthly budget, and you ve got a great surplus for your savings! We ll go over a bit about savings, some tips to sticking to your budget, then you re all done for the day! Income Surplus: If you re wanting to save for a trip, let s say, you shouldn t make the savings now go to your trip. If you can, try to integrate in an expense, which is x amount for your trip. Your savings are for your retirement, or an emergency fund! It s important to ensure these are not disturbed too much. Sticking to the Budget That wasn t too hard making a budget, now was it? Unfortunately, sticking to it is the tough part, as it sometimes means having to refuse a purchase you wanted to make. However, as you ll learn in later lessons, you ll end up much better off by following your budget. Trust us! So how do I stick to a budget? While we can t do this for you, we can definitely give you some tips that should help! $ % Congratulations! You ve just made your very own Track Purchasing A budget doesn t mean you can t buy anything you want; it just means buying what you can afford! For example, if you have a monthly lifestyle budget of $200, when you spend $50 on clothes, note that and be aware you have $150 left for the month. This can help curb impulse purchasing. If you have $25 left on your monthly lifestyle spending and you are fully aware of this, you ll hopefully think twice and say no to $50 of clothes! 2. Use Lists When you go grocery shopping, prepare a list before you leave, and make sure you buy only that at the store. This allows you to roughly make sure the list is within your monthly food budget. It also helps stop impulse purchasing food s on sale you don t need! MONTHLY BUDGET Come back for your lesson tomorrow on... Why Save? - The Basics While this list tactic is primarily for food shopping, you may find it applies to similar shopping areas, like clothes shopping, for example. Monthly Budget lesson star earned Total lessons completed 10 Day lesson streak Finish

15 Prototyping - Financial Teacher Materials (Visual) - Person A Person A is an individual on salary, and who is currently spending more than they make each month, primarily in lifestyle. $65,000 / year $2, bi-weekly net pay $1,000/mon rent $195/mon phone/ internet $12/mon Netflix $300/mon food $150/mon household $1200/mon lifestyle $200/mon lunch $550/mon ent. $200/mon gas $10/mon Spotify $800/mon car $300/mon Student debt Materials (Visual) - Person B Person B is an individual on hourly rate, and who is already generating a 15% surplus. $17 / hour 40 hours per week $1, bi-weekly net pay $650/mon rent $105/mon phone/ internet $12/mon Netflix $600/mon $30/mon food $150/mon household $250/mon lifestyle $50/mon lunch $150/mon ent. Student debt 11

16 Prototyping Financial Tracker This section includes all of the initial prototyping for the financial tracker concept. This includes plan, materials needed, learning outcomes, and other details.

17 Prototyping - Financial Tracker Track School Debt With an expensive purchase, what is the best way to represent it s impact in various cases? Prototyping Method Platform for Testing: This will be a pretty straightforward A/B test. Participants will be given multiple representations of student debt of $26,000: if paid off immediately, if paid off in 5 years (60 months), and if the minimum payment is made each month (174 months). N/A Different views will be used to convey the given information, to determine what is the most clear and impactful. There will be a visual graph, as well as simply the numbers represented. Testing Structure: Learning Outcomes Offering more information than just tracking money in and out is crucial to this application design. Determining the way in which information can be conveyed with meaning is the key learning outcome. This also may help understand what level of financial burden is impactful to people. If they find that they re paying an extra 20% on their student debt by not paying it down as fast as possible, is that enough to spark a change? How many thousands of dollars of debt are required? A/B Testing Material / Form: Images on Screen 12

18 Prototyping - Financial Tracker Expected Outcomes I m interested to see what has a greater impact on people. I expect simply stating the thousands of dollars difference in payback methods will be the most impactful. However, the graph view is more useful for more than one expense. I d ideally like to see participants find both useful, and would desire both, dependant on the situation. With all this said, there s a lot of information required to make even a fake representation. My fear is that participants may get caught up / confused trying to register all the fake information with the graph. As this would ultimately use their financial situation, it would ideally be much more clear to the participant. Materials Graph Visuals A bar graph representing projections of the impact of the debt over a twenty-year period. Information A text display of the impact per year in a dollar amount value, for a twenty year period. Post-Session Questions On the topic of the graphs Do you find the graphs to be a useful display of the impact of this student debt? 1. a. In any way, was the graph unclear? 2. Do you find the impact of the debt surprising, based on the payback method? 2. a. Was this more or less surprising than what you expected? On the topic of the text information Was this a clear and easy way to parse this information? 2. Is seeing the number value important to you? Does this increase clarity? 13

19 Prototyping - Financial Tracker Materials (Visual) For the sake of removing any bias or skewing the data, the information used will be all averages currently in Canada, so the information will be as follows: Income: $51,000 / year Student Debt: $26,000 Savings: $26,000 The individual will have $26,000 in savings, so that they don t magically have an extra $26,000 to pay off the debt in full. Also, we ll assume the individual saves 15% of their total income per year, so it is clear how the differences in payback methods affect savings. Paying Back the Full Amount Immediately 200,000 Total Savings at 20 Years: $153,000 Estimated Savings 180, , , , ,000 Savings ($) 80,000 60,000 40,000 20, Year Paying Back in 5 Years 200,000 Total Savings at 20 Years: $148,520 Estimated Savings Debt Influence on Savings 180, , , , ,000 Savings ($) 80,000 60,000 40,000 20, Year

20 Prototyping - Financial Tracker Materials (Visual) Paying Back in 14.5 Years 200,000 Total Savings at 20 Years: $140,198 Estimated Savings Debt Influence on Savings 180, , , , ,000 Savings ($) 80,000 60,000 40,000 20, Year

21 Prototyping - Financial Tracker Materials (Visual) Paying Back Immediately Paying Back in 5 Years Monthy Debt Payment Monthy Debt Payment Yearly Debt Payment Yearly Debt Payment $0 $508 $0 $6,096 Percentage of Savings Towards Debt (year 1-20) Percentage of Savings Towards Debt (year 1-5) Percentage of Savings Towards Debt (year 5-20) 0% 79.6% 0% Yearly Savings (year 1-20) Yearly Savings (year 1-5) Yearly Savings (year 5-20) $7,650 $1,554 Total Savings at 20 Years: Total Savings at 20 Years: $153,000 $7,650 $148,520 Paying Back in 14.5 Years Monthy Debt Payment $223 Yearly Debt Payment $2,676 Percentage of Savings Towards Debt (year 1-14) 34.9% Yearly Savings (year 1-14) $4,974 Percentage of Savings Towards Debt (year 15) 17.5% Yearly Savings (year 15) $6,312 Total Savings at 20 Years: $140, Percentage of Savings Towards Debt (year 16-20) 0% Yearly Savings (year 16-20) $7,650

22 Prototyping - Financial Tracker Money Visualization Looking at various ways to visualize money coming in and out, what visualizations are most useful to understand your personal financial state. Prototyping Method Platform for Testing: Participants will be shown various data visualizations of a financial situation, and asked about the usefulness and clarity of each visual representation. Learning Outcomes The goal is determine what kind of visualizations (if any) make understanding their earning, saving and spending better. Mobile Testing Structure: Is This Useful? Material / Form: Images on Screen 17

23 Prototyping - Financial Tracker Expected Outcomes I don t suspect anyone will find any visualization completely useless, but standard graphs like bars and pies are the most recognizable, so I suspect participants will find these the easiest to understand. Materials Graph Visuals Various graphs displaying basic money information, like savings and spending. Post-Session Questions On the topic of the visualizations Do you find all of these representations to be useful in understanding the financial situation displayed? 1. a. In any way, was any representation unclear? 2. If you had to pick, which would you say is the ideal representation? 18

24 Prototyping - Financial Tracker Materials (Visual) 8:40 PM 8:40 PM Savings Account Credit Card 2017 $8000 VISA Gold Card $7000 Credit Limit: $5,000 Payment Date: 2nd Statement Date: 24th $6000 $5000 $2,101 Current Bill: Remaining Balance: $ /10 01/13 01/14 01/17 01/18 01/20 $6,401 Savings Account Total: 30-Day Earnings: 30-Day Expenses $3,945 $2,722 $2,101 OPEN TRANSACTION HISTORY $3,899 01/21 OPEN TRANSACTION HISTORY 8:40 PM 8:40 PM Credit Card Credit Card Current Bill: Current Bill: $2,101 $2,101 CLOSE TRANSACTION HISTORY Loblaws $74.81 McDonald s $12.24 Wal-Mart $46.73 Wendy s $2,101 $9.43 Xbox Marketplace $56.03 PRESTO Groceries Household Lifestyle $ Starbucks Car Entertainment Dining Out $6.05 OPEN TRANSACTION HISTORY 19

25 Prototyping Timeline This is a broad overview of the steps in order to be taken, with all prototypes noted, and progression once prototyping is complete.

26 Prototyping - Financial Tracker Timeline This outline roughly the plan for prototyping, and how progress will be made once the initial prototyping outlined here is complete. Iteration will be included in further steps. Prototype - Session Length Prototype - Track School Debt Prototype - Lesson Content and Flow Prototype - Money Visualizations Process Feedback and Refine Final Idea At this point, I plan on taking all of the feedback, and creating a final concept to move forward with. If prototyping reveals one as clearly stronger, that will be the final concept, otherwise a consolidation of the two may be decided upon. Create Structure and Information Architecture With a final concept selected, I plan to begin developing structure for the key features of this product, and creating the full IA of the product. Rough Prototype - Full Concept A rough, full concept will be developed, and given to participants to ensure that all key features are designed well, and any major design errors are not missed. A/B Test Design Styles I m curious as to whether a simple clean design is desired, or if something a little more colorful and fun (uncommon in finance) is more enjoyable. High-Fidelity Design Build It s that easy!... 20