Financial advice is all over social media, but be careful who you listen to.
Key Points Millennials and Gen Z are using social media to get financial advice on all sorts of topics, including investing, budgeting and debt reduction. The quality of financial advice on social media varies, and you can lose money if you’re not careful. Find out about any advice you want to follow and make sure you fully understand it.
Get moving, financial advisor. Social media platforms have become the first port of call that younger generations turn to when looking for personal financial advice. According to a survey by Forbes Advisor, 79% of Millennials and Gen Z have received financial advice on social media.
You seek advice on a wide range of financial issues. Investing in stocks and bonds was the most common choice, with 57% of young adults saying they used social media to find out more. Personal budgeting (51%), passive income (49%), debt reduction (40%) and building or improving credit (37%) rounded out the top 5 topics.
That may sound like a recipe for disaster. That’s not always true, but there are some definite dangers in learning about money on social media.
Financial advice on social media is qualitative across the board. Some of it is excellent. Some of this is fine or might be useful for certain viewers, but not all. And some of them are just plain awful or just a scam aimed at making money for the content creator.
There are a few reasons why trusting financial advice on social media is risky:
Anyone can be an influencer. There is no vetting process and it’s easy for people on social media to lie about their qualifications or financial success. Since there is no barrier to entry, many of the people giving advice really aren’t qualified to do so. Content creators don’t always have their best interests in mind. Some try to make money at the expense of their audience. You can do this with outright scams like Crypto Pump and Dumps. Others promote shady financial products, like the many life insurance agents who offer high-fee policies. Sensational content brings the views. This often leads to inaccurate information circulating, like last year’s cash-walking warning on TikTok.
However, it’s not all bad. There are many people who give useful financial advice. And there are some benefits to learning about money on social media.
One of the biggest benefits is that you get financial advice in a format you’re comfortable with. If you enjoy using Reddit, you can go to the subreddit for the financial topic you are interested in, e.g. B. Investments, credit cards or personal finances in general. If you are a fan of TikTok, you can follow reputable financial influencers there.
Social media also allows more people to access financial information. Among those surveyed by Forbes, 78% said they believe their identity (race, gender or income) gives them more access to financial advice than in the past. And 76% of Millennials and Gen Z believe social media has made talking about money less taboo.
There’s nothing wrong with using social media to learn about finances if that works for you. But you need to know how to do this safely so you don’t lose money on lousy advice.
Here’s the most important thing to remember: research advice and make sure you fully understand it before following it. Never take advice just because an influencer says it’s a good idea.
For example, if you see a video that recommends a particular investment, look it up yourself. Check if experts have spoken about it and evaluate the pros and cons of this investment. Make an informed decision based on your own research.
Also, do your homework on the person giving the advice. Google them to check if they have credentials like awards, education, or any background in personal finance. This is a great way to find quality financial influencers to follow.
While opinions are divided about using social media for financial advice, people are doing it and it will almost certainly become more common. The key is knowing how to separate the good advice from the bad. If you do this by double and triple checking information, social media could be a useful tool for better money management.
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