Financial AI Literacy: Developing and Testing a New Scale for AI-Assisted Financial Decision-Making

The rapid diffusion of generative artificial intelligence (AI) is reshaping how individuals access, interpret, and use information when making complex decisions. In the finance, AI-powered systems such as large language models can provide personalized explanations, compare financial products, and support decisions related to borrowing, saving, investing, and retirement planning. This technological transformation challenges traditional assumptions about financial decision-making, where individual financial knowledge has been considered a fundamental determinant of decision quality. For decades, research on financial literacy has emphasized that individuals with higher levels of financial knowledge are better equipped to evaluate financial products, understand risks, and make informed choices. Financial literacy has therefore become a central policy objective worldwide, based on the ground that improving individuals’ knowledge can enhance their financial well-being. However, the increasing availability of AI-generated financial information raises a new question: if individuals can obtain sophisticated financial guidance from AI systems, does financial knowledge remain the primary determinant of sound financial decisions? Although generative AI may reduce information barriers by making financial explanations and recommendations more accessible, its benefits depend critically on users’ ability to interact with and evaluate AI-generated outputs. AI systems may produce incomplete, inaccurate, or overly confident recommendations, particularly when relevant personal circumstances, risk preferences, or future uncertainties are not properly considered. Consequently, individuals need more than access to AI tools; they require the ability to understand how to use them effectively, recognize their limitations, and integrate their recommendations appropriately into financial decision-making. This paper introduces the concept of Financial AI Literacy, defined as the ability to effectively evaluate, verify, and integrate AI-generated financial information when making financial decisions. To operationalize this emerging construct, we develop an initial measurement instrument combining self-reported perceptions of Financial AI Literacy with an objective assessment based on individuals’ evaluation of AI-generated financial recommendations in realistic decision scenarios.