Testing the Hypothesis, Part 1
Financial Literacy Opportunity
Opportunity: I believe an opportunity exists to create a web service that teaches young to middle-aged adults the fundamentals of budgeting, saving, and investment for future goals, but in a way that others haven't done before. I see a need by a lot of my friends and family members who are joining the workforce or are a few years into their career to learn these crucial skills, and most attempt to solve their problem with some self-help book offering broad definitions on how to reorganize their finances and build wealth. However, I think what a lot of people end up doing is reading a book like this, getting really motivated for a week or so, and then return to their old habits of unchecked spending. While books on finance have helped many people in the past, I believe this model should be updated to account for resources in the information age, where an online platform can offer a combination of reading material and short videos to discuss important topics, as well as integrated, interactive financial tools that can model a user's finances in real time and change on the fly (e.g. monthly budgeting tool, active saving goals tracking, retirement tracking, etc.). While most of this information exists in some capacity elsewhere, I haven't seen someone combine this information and finance tools into a one-stop shop for all financial literacy needs for the modern age of information.
- Who: Younger to middle-aged adults, post-college, who have joined the work force and feel longstanding anxiety about their financial position, and comfortable with using the internet to solve their daily needs.
- What: There is a lack of financial resources that utilizes the web's ability to offer interactive learning opportunities, combining the "what you should do" with the "how you should do it", in an easily digestible format.
- Why: I think this problem exists because people who make financial literacy resources are stuck in their ways, as everyone who wants to make a resource to understand personal finance thinks to write a book, or electronic book, and this process does not fully satisfy the needs of consumers, who not only want to get excited about improving their financial lives, but also have actionable goals and a specific method of doing so.
Testing Hypothesis:
- The Who: I think my product could be useful to people outside of my defined demographic, but I think in a lot of cases it will be met with extreme lethargy. For example, much older people probably have a need to curtail their spending, but would likely respond poorly to an online format for this information and tools. Furthermore, college students would likely respond well to an online, interactive format for this material, but as they are the age where they care less about their spending habits, most would probably not find a need for the product. Additionally, my target income division is likely middle to upper-class individuals, i.e. those with disposable income to spend on a product like this, but not so much money that too much spending is not a problem they face.
- The What: While I think I have defined my problem well, the parameters of what people in my demographic want for their own financial edification will be defined in the following interviews. Overall though, I think it is a universal desire of those in the workforce to curtail unnecessary spending and save for the future, as the anxiety many feel by "not doing enough" is a palpable, gut-wrenching feeling.
- The Why: While I think this problem is a universal issue for most members of the working class, I'm positive the "why" will vary dramatically from person to person, so this will be something I explore in my interviews. If I had to guess though, the problem will not boil down to simple financial concerns, but rather a feeling of inadequacy in one's financial position, especially when compared to their peers, as this is what I've discovered when talking to friends and family previously. Thus, this problem should probably be tackled from an emotional standpoint rather than a logical one, a solution to release the long-term mental anguish of not being in the "correct" financial position for your age, while still being results driven to bolster this feeling.
Interviews:
Interview #1: Graduate from the University of Florida (22M)
My first interview was with a graduate from UF, who says he constantly feels the tightness of money, and wishes he could escape that feeling. He works as a paid intern at UF Shands, doing filing work for the cancer center, paid hourly. He wishes he was a salaried employee, because any time his department is shut down, be it for holidays or hurricanes, his paycheck is smaller, which is tough because it is already hard enough to make ends meet while prepping for the MCAT and medical school. He cuts costs by meal prepping and avoiding eating out, but he recognizes that there is more he can do to save money for important things, like building a small nest egg for the transition to medical school after he leaves his job. While he lacks a large disposable income now, he thinks he could benefit from a financial literacy resource so he can avoid making mistakes in the future, when he hopefully makes a decent wage as a doctor.
Interview #2: Graduate from the University of Florida (22F)
My second interview was with another UF graduate, a prospective nursing student. She struggles with some of the same issues as the first interviewee, but is in a different position, as she and her boyfriend cohabitate to lower the cost of rent. Her boyfriend, an engineer, has a full-time paid position, and will support her while she studies. While money is not as tight as it used to be for them, they still try to cut down on unnecessary spending, only going out with friends on a weekly, or bi-weekly basis, a lot of the time just going to a friend's house to chat and watch a movie or something to avoid the expensiveness of bars and nightclubs. She also says she has a lot of unanswered questions about finance, mainly in defining terms that are foreign to her (e.g. Roth IRA, 401k, FDIC, Credit Union, etc.), and how she can set herself up for future success. This interview shows me that basic definitions of common financial terms would be beneficial for users of the web service, perhaps in short, explanatory videos that walks the user through the topic and how it relates to them.
Interview #3: Adult living in Orlando (45F)
My next interview was with someone in a very different position in life, a Landscape Architect from Orlando who is married with teenage children. She also experiences the feeling of money tightness and insecurity about her financial position, but for very different reasons, mainly in the need to save for retirement in 20 years and fund her children's college costs. She says she is doing financially better than she ever has in her life, which is exciting, but she worries that she'll end up just living a more costly lifestyle and save none of her increased pay. She wishes there was some kind of "easy button" to press, that would automatically put away money for her so she doesn't see it, as well as something to prevent her from making unnecessary purchases that really are just for the dopamine rush of buying something. She believes she can adequately cover the cost of college for her children, but worries that she started too late to save enough for retirement, and that her current saving is not enough for it. This interview shows me that savings goals, like college funds and retirement planning, should be included in this service, perhaps with modeling that shows how changing monthly saving amounts can lead to different final saving amounts, as well as a system that analyzing your current cost of living and shows what you need to save to sustain this life in retirement.
Interview #4: Adult living in Orlando (48M)
My fourth interview was with another adult living outside of Orlando, also married with children. He is a counselor working in Winter Park, and says he is adequately compensated, but feels he should expand his client load to better care for his family. He faces an ethical dilemma in this regard, as he does not want to diminish the quality of care each individual receives, but also must ensure that his family has their needs met by his work. He says he is in a much better financial position than he was 10 years ago though, as business dropped dramatically following the 2008 recession. He has used courses before to restructure his financial life, he didn't wind up sticking to the majority of them, only really changing his spending habits when noticing a lack of funds in his accounts. He also feels conflicted, because a lot of the stuff he buys is to improve the quality of life of his entire family, like a new television to replace and decade-old model, but he also wants to ensure that his family will never be in a position of financial ruin, even if he passes earlier than expected. This interview has taught me that reassuring the user that spending is not bad in moderation is important, and that big purchases are alright, but should be planned for to prevent financial disparity.
Interview #5: Adult living in Miami (37M)
My final interview was with a financial planner from Miami, one who was recently made a partner at his firm and has seen a significant pay increase as a result. He also has a family to care for, and intends on sending each child to college by establishing a college fund when they're born. He has an in-depth knowledge of personal finance, as his job is to secure the retirement and future living of wealthier Miami residents, information which he uses in his own life to plan for his own retirement and potential financial emergencies. He reads a lot of books on the subject, and says his position on where to invest has changed from when he started his job to now. He thinks all people should take advantage of existing financial literacy resources, but also admits he hasn't seen an integrated system that offers tools and learning resources at the same time, and that he would be interested to see how that might function. He feels he is stuck in his ways with tools to budget and save, but thinks a product like this could be useful to those who have no prior knowledge of finance, sort of as a crash course on the basics of finance and practical tools to complete this job. This interview taught me that people from all financial backgrounds must continually educate themselves on the subject, and also that people tend to be resistant to change from their existing pattern of solution-solving, so the user interface of this service should be easy to navigate and not feel challenging to master, so as to prevent people from giving up and returning to their previous system.
Summary: My interviews confirmed what I thought previously about how individuals approach their finances, in that it often generates emotional feelings in people rather than a logical framework for how to tackle issues of money. Considering this, the web service I offer should provide information in a way that helps users work through their money insecurities rather than add to the feeling like they don't know enough, perhaps by ensuring all potentially unknown terms are defined in each video resource, and that the individual explaining the topics in the video is calming and assuring to the user that they have what it takes to understand the finance world and take control of their lives. That is not to say, however, that this should simply be a mental calming service with no substance, but rather results-driven to show the user that what they're doing is working, lessening their anxiety overall. Also, the integrated budgeting and saving tools should have an interface that is intuitive to prevent frustration and users giving up, maybe designed in a way that rewards users for continued use, much like how Khan Academy uses points and avatars to engage audiences. Overall, I believe my hypothesis that there is a need for a service that centralizes financial information and tools in an interactive environment is desired by the public, but should cater to the nearly universal feeling of money stress felt by working class individuals.
My first interview was with a graduate from UF, who says he constantly feels the tightness of money, and wishes he could escape that feeling. He works as a paid intern at UF Shands, doing filing work for the cancer center, paid hourly. He wishes he was a salaried employee, because any time his department is shut down, be it for holidays or hurricanes, his paycheck is smaller, which is tough because it is already hard enough to make ends meet while prepping for the MCAT and medical school. He cuts costs by meal prepping and avoiding eating out, but he recognizes that there is more he can do to save money for important things, like building a small nest egg for the transition to medical school after he leaves his job. While he lacks a large disposable income now, he thinks he could benefit from a financial literacy resource so he can avoid making mistakes in the future, when he hopefully makes a decent wage as a doctor.
Interview #2: Graduate from the University of Florida (22F)
My second interview was with another UF graduate, a prospective nursing student. She struggles with some of the same issues as the first interviewee, but is in a different position, as she and her boyfriend cohabitate to lower the cost of rent. Her boyfriend, an engineer, has a full-time paid position, and will support her while she studies. While money is not as tight as it used to be for them, they still try to cut down on unnecessary spending, only going out with friends on a weekly, or bi-weekly basis, a lot of the time just going to a friend's house to chat and watch a movie or something to avoid the expensiveness of bars and nightclubs. She also says she has a lot of unanswered questions about finance, mainly in defining terms that are foreign to her (e.g. Roth IRA, 401k, FDIC, Credit Union, etc.), and how she can set herself up for future success. This interview shows me that basic definitions of common financial terms would be beneficial for users of the web service, perhaps in short, explanatory videos that walks the user through the topic and how it relates to them.
Interview #3: Adult living in Orlando (45F)
My next interview was with someone in a very different position in life, a Landscape Architect from Orlando who is married with teenage children. She also experiences the feeling of money tightness and insecurity about her financial position, but for very different reasons, mainly in the need to save for retirement in 20 years and fund her children's college costs. She says she is doing financially better than she ever has in her life, which is exciting, but she worries that she'll end up just living a more costly lifestyle and save none of her increased pay. She wishes there was some kind of "easy button" to press, that would automatically put away money for her so she doesn't see it, as well as something to prevent her from making unnecessary purchases that really are just for the dopamine rush of buying something. She believes she can adequately cover the cost of college for her children, but worries that she started too late to save enough for retirement, and that her current saving is not enough for it. This interview shows me that savings goals, like college funds and retirement planning, should be included in this service, perhaps with modeling that shows how changing monthly saving amounts can lead to different final saving amounts, as well as a system that analyzing your current cost of living and shows what you need to save to sustain this life in retirement.
Interview #4: Adult living in Orlando (48M)
My fourth interview was with another adult living outside of Orlando, also married with children. He is a counselor working in Winter Park, and says he is adequately compensated, but feels he should expand his client load to better care for his family. He faces an ethical dilemma in this regard, as he does not want to diminish the quality of care each individual receives, but also must ensure that his family has their needs met by his work. He says he is in a much better financial position than he was 10 years ago though, as business dropped dramatically following the 2008 recession. He has used courses before to restructure his financial life, he didn't wind up sticking to the majority of them, only really changing his spending habits when noticing a lack of funds in his accounts. He also feels conflicted, because a lot of the stuff he buys is to improve the quality of life of his entire family, like a new television to replace and decade-old model, but he also wants to ensure that his family will never be in a position of financial ruin, even if he passes earlier than expected. This interview has taught me that reassuring the user that spending is not bad in moderation is important, and that big purchases are alright, but should be planned for to prevent financial disparity.
Interview #5: Adult living in Miami (37M)
My final interview was with a financial planner from Miami, one who was recently made a partner at his firm and has seen a significant pay increase as a result. He also has a family to care for, and intends on sending each child to college by establishing a college fund when they're born. He has an in-depth knowledge of personal finance, as his job is to secure the retirement and future living of wealthier Miami residents, information which he uses in his own life to plan for his own retirement and potential financial emergencies. He reads a lot of books on the subject, and says his position on where to invest has changed from when he started his job to now. He thinks all people should take advantage of existing financial literacy resources, but also admits he hasn't seen an integrated system that offers tools and learning resources at the same time, and that he would be interested to see how that might function. He feels he is stuck in his ways with tools to budget and save, but thinks a product like this could be useful to those who have no prior knowledge of finance, sort of as a crash course on the basics of finance and practical tools to complete this job. This interview taught me that people from all financial backgrounds must continually educate themselves on the subject, and also that people tend to be resistant to change from their existing pattern of solution-solving, so the user interface of this service should be easy to navigate and not feel challenging to master, so as to prevent people from giving up and returning to their previous system.
Summary: My interviews confirmed what I thought previously about how individuals approach their finances, in that it often generates emotional feelings in people rather than a logical framework for how to tackle issues of money. Considering this, the web service I offer should provide information in a way that helps users work through their money insecurities rather than add to the feeling like they don't know enough, perhaps by ensuring all potentially unknown terms are defined in each video resource, and that the individual explaining the topics in the video is calming and assuring to the user that they have what it takes to understand the finance world and take control of their lives. That is not to say, however, that this should simply be a mental calming service with no substance, but rather results-driven to show the user that what they're doing is working, lessening their anxiety overall. Also, the integrated budgeting and saving tools should have an interface that is intuitive to prevent frustration and users giving up, maybe designed in a way that rewards users for continued use, much like how Khan Academy uses points and avatars to engage audiences. Overall, I believe my hypothesis that there is a need for a service that centralizes financial information and tools in an interactive environment is desired by the public, but should cater to the nearly universal feeling of money stress felt by working class individuals.
Hi John,
ReplyDeleteWell done with this post! I really do like your idea of making an integrated, all inclusive financial literacy course. While I will admit that there seems to be a lack of a good all-in-one course, at the same time this is such a saturated market with so many "gurus" and people trying to sell their courses and books and ideas.
In reality, becoming financially literate is just a matter of being mature and disciplined- something people in our society lack in bounds. This would definitely something I'd keep in mind while pursuing this. How conscious and willing, not only today but in time, truly are your prospective customers?
Hey John, I was very glad to be reading this post! I think it is very great on your idea on helping people get proper knowledge! I have been in this situation where I end up reading books, websites, and blogs on things to do to change but they appear to only work for a short amount of time. I definitely feel this is an issue that could be fixed in some sort of way for consumers. Becoming better with finances is something the world needs as I have a lot of friends who are not the best at it! I feel a lot of us just became exposed to the real world with scholarships or financial aid from the university and we do NOT know how to act! I feel that you should definitely do something like this to better others life's in the long run!
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