How AI Chatbots Can Help Reduce Financial Anxiety Among Young Adults
Financial anxiety is a silent struggle for many young adults. In the UK alone, 67% of people report feeling anxious about their finances. This anxiety isn’t just about how much money you have, it’s about the stress of managing it, planning for the future, and feeling confident in your financial decisions.
As a UX designer, I wanted to explore how technology, specifically AI chatbots, could help young adults improve their financial literacy and, in turn, reduce their financial anxiety. For my master’s dissertation, I designed and tested a financial literacy chatbot called DEO, powered by GPT-4.0, to see if it could make a difference. Here’s what I found.
The Problem: Financial Anxiety and Low Financial Literacy
Young adults (ages 18–27) are particularly vulnerable to financial anxiety. Many are juggling student loans, entry-level salaries, and the rising cost of living. On top of that, they often lack basic financial knowledge, which makes it harder to make informed decisions about saving, investing, or managing debt.
The question I wanted to answer was: Can AI chatbots help young adults improve their financial literacy and reduce their financial anxiety?
The Experiment: Guided vs. Unguided Chatbot Interactions
I designed DEO, a chatbot that teaches financial concepts like investing, interest rates, inflation, and the stock market. To make the experience engaging, I incorporated interactive elements like quizzes, examples, and a friendly, conversational tone.
I tested two types of interactions:
Guided Interaction: The chatbot led the conversation, breaking down topics step by step.
Unguided Interaction: Users could choose their own topics and ask questions freely.
I recruited 26 young adults to test DEO. Each participant spent 40 minutes interacting with the chatbot, and I measured their financial literacy before and after the session. I also gathered feedback on their experience through interviews and usability questionnaires.
Key Findings
AI Chatbots Can Improve Financial Literacy (But There’s a Catch)
Both guided and unguided interactions led to improvements in financial literacy, though the gains weren’t huge. What stood out was the difference between perceived knowledge and actual knowledge. While most participants felt more confident about their financial knowledge after using the chatbot, only 60% showed measurable improvement in their financial literacy scores.
This suggests that while chatbots can boost confidence, they might need more robust design features to ensure users are truly learning.Guided vs. Unguided: It Depends on the User
Participants with little to no financial knowledge preferred the guided interaction. They appreciated the structured approach, which helped them navigate complex topics without feeling overwhelmed.
On the other hand, participants with some financial knowledge preferred the unguided interaction. They enjoyed the freedom to explore specific topics and ask questions tailored to their interests.User Experience Matters
Participants loved the chatbot’s friendly tone and interactive elements, but they wanted more. Many suggested adding visuals like images, videos, or animations to make the experience more engaging. Some also found the chatbot’s responses too fast and overwhelming, suggesting adjustable reading speeds or highlighted prompts to make key information stand out.Financial Self-Efficacy Improved
One of the most promising findings was the increase in financial self-efficacy, participants’ confidence in their ability to apply what they learned to real-life situations. This is crucial because financial self-efficacy is closely linked to reduced financial anxiety.
What This Means for UX Design
This research highlights the potential of AI chatbots as tools for financial education, but it also underscores the importance of thoughtful design. Here are a few takeaways for UX writers and designers:
Personalisation is Key: Different users have different needs. A hybrid approach that allows users to switch between guided and unguided modes could offer the best of both worlds.
Engagement is Everything: Text-heavy interactions can feel overwhelming. Incorporating multimedia elements like visuals, animations, and interactive scenarios can make learning more enjoyable and effective.
Confidence ≠ Competence: While chatbots can boost users’ confidence, designers need to ensure that this confidence is backed by actual knowledge. This might mean incorporating more robust testing or reinforcement mechanisms into the chatbot’s design.
Final Thoughts
AI chatbots like DEO have the potential to make financial education more accessible and engaging for young adults. While there’s still work to be done to optimise their effectiveness, the results of this study are promising. By improving financial literacy and self-efficacy, chatbots can help young adults feel more in control of their finances—and less anxious about their future.
If you’re interested in exploring how AI and UX design can work together to solve real-world problems, feel free to reach out. Let’s keep the conversation going!
This article post is based on my master’s dissertation, “Exploring the Role of AI Chatbots (ChatGPT-4.0) in Reducing Financial Anxiety Among Young Adults by Enhancing Financial Literacy.”