Millennials & Zoomers: Is Social Media Increasing Financial Awareness?
Over the years, social media has proven itself to be a powerful platform. Not only can it be used to create connections and share ideas, but it’s also home to a wealth of information. And this past year’s battle with inflation had a lot of people looking to platforms like Twitter and TikTok for information on finance. Online finance experts are flocking to social media to provide advice for the growing demand, but has TikTok really changed how users handle their money?
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It turns out that it has. A recent GOBankingRates survey found that social media had a direct impact on Millennials and Zoomers in 2022. While the majority of people responded saying that social media had no impact on their bank accounts, it seems that the younger the consumer, the more likely they are to implement advice they’ve gotten from social media. 57% of Zoomers aged 18-24 said that social media had a positive influence on their finances, and 47% of Millennials aged 25-44 agreed.
James Beckett, a personal finance writer at TinyHigh.com, said, “my personal interest in finance has been shaped & nurtured by discussions on social media, internet forums and other online communities.” However, when it comes to seeking out financial advice on social media, what you find may be a double-edged sword. Here’s what the experts have to say about social media’s effect on financial literacy.
PRO: Social Media Makes Finding Advice Easier
Certified financial planner and founder of True Worth Financial Planning, Rachel Burns found that social media has made it easier for younger generations to consume financial advice. Thanks to Twitter and TikTok, online finance experts are “more approachable and relatable, and they deliver financial advice in easy to digest, bite-sized chunks.” Burns said, “Before social media, the average person didn’t ‘qualify’ for expert advice because they didn’t meet account minimums of traditional financial advisors, but now access has been opened up to anyone with a smartphone.”
Jake Hill, CEO of DebtHammer, said, “being financially responsible is not taught in school. In fact, most kids are encouraged to take out student loans they can’t afford to get a degree they may or may not end up using.” Social media fills in the gaps left by traditional education by providing access to a variety of financial tools and breakdowns that make sense to the average consumer. “Social media is shedding the light on the rigged debt system that America operates on, with solid advice on how to navigate through that system for the best results possible,” finished Hill.
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CON: You Can’t Trust All Advice
Unfortunately, there’s just as much bad advice on the internet as there is good advice. Burns warned users that “the danger in financial advice on social media is that it is generic and does not take into account your unique circumstances.” Since financial advice isn’t really one-size-fits-all, you’ll have to decide if the advice you’re getting fits with your situation and can actually help.
PRO: Personal Finance Influencers Are Relatable
Andrew Lokenauth, a finance expert and professor of finance at the University of San Francisco’s School of Management, agreed that social media contributes to financial literacy. “Many financial experts and organizations have a presence on social media, which allows individuals to ask questions and get advice directly from professionals.” He said, “social media can also be a place for individuals to share their own experiences and knowledge about personal finance with others, which can be a helpful learning resource.”
Certified financial planner and blogger at FinancialFives, Gary Grewel added, “young people aren’t usually reading financial magazines or articles online, so it’s important to reach them where they are, such as on TikTok, YouTube and Instagram.” By creating relatable and engaging content on platforms like YouTube, these finance experts are appealing to a wider and possibly younger audience.
CON: Not All Influencers Are Created Equally
Burns also said that not all influencers are qualified professionals and “can run afoul of the strict regulations around financial advice.” She recommended that users look up an expert’s credentials before taking their financial advice. You can use sites like BrokerCheck, which has a free tool to look up the background and experience of financial advisors.
“Where it gets dangerous is certain ‘influencers’ don’t have the financial knowledge to understand all the risks involved and can direct their viewers to high-risk investments such as cryptocurrency or ‘meme stocks.'” Grewel said. “Some influencers are more interested in getting affiliate link clicks or sending viewers to a sponsor, which may not be the best for their audience.”
Tips To Avoid Bad Advice
Lokenauth provided these tips to help determine whether the advice you’ve found is helpful:
- Consider the source: Is the information coming from a reputable source, such as a financial professional or a reputable organization?
- Check for credibility: Have the claims been fact-checked or supported by research?
- Look for multiple sources: Is the information consistent with what you have learned from other sources?
- Use your own judgment: Does the advice seem reasonable or does it seem too good to be true?
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