As social media use becomes a constant part of our lives, avoiding misinformation online is increasingly challenging. Anyone can create a persuasive persona that attracts millions of followers. Today, young people are seeking quick solutions to complicated financial questions from financial influencers also known as “finfluencers” on platforms like TikTok.
Finfluencers are often seen as modern-day financial advisors, reaching Gen Z where they already spend most of their time—online. However, not all of them have the qualifications to offer accurate financial advice. These creators often pose as reputable sources. They will offer financial advice without any qualifications and may even fail to disclose they get paid to promote certain financial services.
A Forbes Advisor survey by Prolific revealed that 79% of Gen Z and Millennials receive financial advice from social media influencers, and 62% feel empowered by it. This means young adults are hearing this advice and feeling more confident, capable, and in control of their finances. However, it’s important that the younger generation is able to distinguish fact from fiction.
Common Financial Myths Displayed on Social Media
- “Just pay the minimum amount on your credit card statement each month”
While everyone’s financial situation is different, only paying the minimum balance due can lead to a snowball effect. Interest charges can extend the time it takes to pay off the debt. It’s best to pay off your credit card balances as soon as you can. - “Get rich quick with X investment”
If something seems too good to be true, it probably is. Finfluencers on TikTok might promote financial products or courses, promising quick returns. They may even recommend specific stocks or properties to invest in, but it's essential to research. Be wary of promoted products, especially when the claims are outrageous. - “Buy now, pay later, it’s free money”
Content creators might encourage you to live beyond your means by advocating for buy-now-pay-later services. While these can be helpful in some situations, promoting them without discussing the risks is harmful. These services can lead to debt, and unwanted charges. - “Girl math”
This trend on TikTok may be entertaining, but it’s important not to let it influence your financial decisions. Buying something on sale doesn’t mean you’re saving money, and getting a refund doesn’t mean you earned money. This lighthearted trend is funny, but remember to stay grounded when it comes to your budgeting goals. - “Invest all your savings into a single area and get rich”
Putting all your money into one type of investment can be risky due to lack of diversification. Diversification reduces risk by spreading your investments across different financial products, industries, and categories. - “Never pay a collections agency, it’s not your debt to worry about anymore”
Ignoring your debt can have serious consequences. Even though the original creditor sold or transferred the debt to a collections agency, you are still legally responsible for paying it. The collections agency bought the debt and has the right to collect it.
What to Consider When Seeking Financial Advice Online
- Be cautious of anyone promoting products or services for profit.
- If it sounds too good to be true, it probably is.
- Avoid content that uses scare tactics to push you to do something.
- Never rely on a single source, do your research.
- Look for disclosures.
There are many resources available to help you evaluate whether financial advice is trustworthy. If you're uncertain, consult with trusted sources like financial advisors, banks, credit unions, or government websites.
In the meantime, here are four key topics you can easily learn about on your own within our Learning Center:
In today’s digital age, it’s essential to approach financial advice on social media with caution. While finfluencers can be persuasive, their advice often lacks the depth and accuracy required for making safe financial planning decisions. If you have questions, seek advice from certified financial experts and to avoid potential hardships.
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