Personal Budgeting Diary Study - UX Research
Financial Literacy continues to be a topic that elicits many feelings within the Gen Z and Millenial Demographic. A common trope is how no-one is ever really 'taught’ financial literacy within the public education system, and younger people are left to learn about money through their own means, whether it’d be from trial and error, observation of friends and family, or the Internet.
Project Overview
Date: November 25, 2019 - December 13, 2019 (3 weeks)
Team (4 UX Researchers): Ellixs Tulagan, Chris Browne, Trisha Naik, Omar Fakhry
Tools: Google Forms, Google Docs, Pen and Paper
Role: I participated in the entire design process: I helped create the diary study plan, diary study prompts, run the diary study, and analyze the results.
Scenario and Objective
Our UX research team created and carried out a diary study on the topic of financial literacy amongst young adults. With all team members ranging in ages from 22-28 and having various financial experiences as well as lifestyles, we wanted to explore how others within our demographic felt about their financial situation. With this in mind, we curated this research question:
“How do young adults manage their finances daily and how do their financial choices affect them emotionally?
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What is Financial Literacy?
According to Investopedia, Financial literacy is the ability to understand and effectively apply various financial skills, including personal financial management, budgeting, and investing. Financial literacy helps individuals become self-sufficient so that they can achieve financial stability.
Research Method
Since we wanted to gain insight into the behaviours and thoughts of people when they experienced a certain situation, we decided to conduct our research in the format of a structured diary study. In this way, we could gain a contextual understanding of the participants' behaviours.
Planning and Prep
First, all of our members brainstormed some research questions, such as:
How often do you think about money?
How do you feel when you spend money when it’s planned vs. when it’s unplanned?
How does your current financial situation affect how you socialize/go out?
This helped us get to our research question as stated above: How do young adults manage their finances daily and how do their financial choices affect them emotionally?
Screening Questionnaire
Once our research question was formulated, we set up a screening questionnaire on Google Forms that asked potential participants about their age, occupation/school, and basic information on their financial literacy. We then chose four participants who were still in school and aged between 20-30 years old.
Pre-Study
Each team member was paired up with one of the 4 participants for the duration of the study. Before the study commenced, we sent each of our participants’ introductory emails to ensure that they would be comfortable with participating, as well as to give them general logistics.
Here are some interesting insights we gathered from our screening questions before we launched our study:
While our participants claimed to track their expenses and income regularly, none of them used apps to budget their money - an interesting observation considering the age range of our participants, who were brought up on technology and grew during the Internet age.
Logging Period
With the participants selected, we as a team agreed to send out three question prompts during a four day testing period. Our morning and end of day questions focused on collecting data on how our participants planned on spending money and the actual results of their expenditures for that day. We wanted to see how the same question revealed different answers, insights, and habits throughout the week, considering the contrast of a Monday morning compared to a Friday morning.
We decided to send the same morning and end of day question prompts, while our midday question prompts changed each day.
Alternatively, our midday questions focused more on gaining insight into how our users felt about their current situation and their thought processes towards their spending and saving habits. We felt this was a productive way of attaining a well-rounded view of both how our participants think they spend and save their money versus what they do in reality.
Morning Questions:
“How are you feeling today in regards to money? Do you plan on spending money today? How and why? (e.g. bills, transportation, food)”
Evening Questions:
Did you follow through on your plan you made this morning? How did you do?” What did you end up spending money on today? List all your purchases for the day.”
Midday Questions (changed each day, respectively):
“How do you currently meet your financial needs? How does this affect how you spend your money?”
“How do you feel when you spend money when it’s planned vs. when it’s unplanned? What is your thought process when it comes to deciding whether to purchase something?”
“How does your current financial situation affect how you socialize/ go out? How does it affect the types of activities that you choose?”
“How would you define financial literacy? How would you describe your personal knowledge of your own finances?”
Data Analysis
The majority of our participants were engaged and provided insightful answers throughout the study, with a few participants needing some reminders during the week. This was expected by the research team considering our participants had busy schedules. The answers collected from were meaningful, eloquent, and frankly, surprising. We logged all their answers throughout the week and assembled the following week to share our collective thoughts, insights, and comments.
Affinity Diagram
As a way to cluster insights into easy-to-digest themes, we used an affinity diagram and moved forward with the next phase of our study by analyzing the data. Each data point from our participants was written on Post-It Notes, and we were able to center on five central themes within our study.
Key Findings
Unplanned Expenses led to Stress
There were common feelings of regret and annoyance when our participants had unplanned expenses. This led them to feel stressed about their finances. When our participants received money or were paid, they would feel more content, less negative, and be more willing to spend money and go out.
Preference to Spend on ‘Needs’ rather than ‘Wants’
We noticed that our participants were willing to spend on items they said they need rather than simply want. This included health products or groceries that bettered their overall wellbeing, housing/rent, and transportation.
Items such as tech gadgets and clothing items were stated as nice to have but not important if they did not have the budget for it.
Sales made a difference, though.
Our participants were more willing to spend money on their “wants” if those items were on sale. This included making many purchases during the Black Friday and Cyber Monday sales. They rationalized that since they were on sale, it was okay for them to spend the extra money and purchase them because they would not know if they would go on sale again in the future.
Different Situations = Different Income
Some of our participants were international students while some of our other participants were domestic students.
The international student had to work and receive an income as they had to support both themselves as well as send money back home.
The domestic students had support from their parents who often paid for the majority of their expenses and so any money they made from their jobs was meant for personal expenses such as going out, getting food, or buying clothing.
Budgeting is Important to them
There were a variety of ways in which our participants approached budgeting. Some of them are always budgeting their expenditures, while others say they plan on budgeting but never get around to it. A couple even mentioned that they often go over their budgets monthly.
Reflections
What did I Learn?
Google Forms is a very powerful tool to use when running a diary study since it organized the data quickly and effectively.
When running a diary study, keeping questions short and simple was key: even though the diary study was only for 4 days, participants seemed tired of the process in the last few days (fewer entries submitted, and it took more prompting to get them to submit entries).
Creating a Whatsapp Group was great for collaboration. Team members were able to message each other and get feedback faster than they would've had we stuck to just using email for communication.
What would I do Differently Next Time?
I would try to include a debriefing period after the logging period so that the participants have a better understanding of the project's scopes.
I would try to incorporate a follow-up interview with my participant to further understand the data they provided.
I would ask more follow-up questions that target the core decision-making processes of how our participants decide on what they spend or save on.
Next Steps
The hope is that we as a research team could take this data and work with financial institutions and personal banking apps to create more opportunities to teach young adults the importance of financial literacy and better their spending and saving habits. We would be helping young adults learn about how to invest and save whilst also giving banks the possibility to start building a clientele from a younger age. This way if they are more informed on how to approach their finances, they can make better decisions that will benefit their future financial situations and livelihood.