If you spend any time on social media, and it’s quite likely you have, you’ll at some point come across various bits of advice. Whether it’s lifestyle, fashion, interior design, or of course finance, you don’t have to scroll far before seeing some form of tips, tricks, and life hacks. After all, everyone loves a good tip that may help them make better choices, right? However, how much of what you see and read on social media is actually helpful, especially when it comes to money?
The rise of #MoneyTok and similar hashtags poses the question is the financial advice on social media actually worth your time and trust? As platforms are awash with finance social media influencers, each claiming everything from cracking the code to financial freedom, savvy savings tips, and where best to invest your money, how much of what you’re being told is good advice or bad?
As a Financial Conduct Authority (FCA) authorised short term direct lender, we know just how important making smart financial decisions is for your financial wellbeing. Here, we’ll look into the world of social media money advice and why it’s best to be cautious about what you find online. Amongst the many hashtags and trending videos, there are some with genuinely good advice to be found, but not all are equal, so keeping this in mind will help you stay vigilant and protect your financial health.
The Rise of Financial Influencers, or ‘Finfluencers’
According to Deloitte, as many as 25% of 18-24 year old UK banking customers use social media for financial guidance, whilst 20% have also invested money based on recommendations they’ve found on the platforms. Is this entirely surprising considering that 52% of Gen Z are getting financial advice from TikTok whilst 57% get this from Instagram? Probably not, as both platforms boast billions of users worldwide, so at some point finance related content is going to show up on their feeds.
We all know just how much social media has transformed our lives, for better or worse, in the last twenty years, making it very easy to find various bits of advice and information on almost anything. Financial advice is not immune to this, and ‘finfluencers’ are everywhere. Platforms like TikTok, Instagram, YouTube, and X (formerly Twitter) have become the perfect ground for finance social media influencers, each offering unique insights into money management, investment strategies, and personal finance. According to TikTok, 74% of European users say that finance-related topics are very important to them, so that represents a huge amount of people wanting this type of content in their feeds.
The appeal of these finfluencers isn’t just in the content they create but also in their approachability and relatability. They often share personal stories and experiences, making financial advice more human and less intimidating. This personal touch, combined with the ease of accessing their content, has helped finfluencers amass large followings, particularly among millennials and Gen Z, who often find traditional financial advice channels less engaging.
However, whilst they may seem genuine on the surface, are these finance social media influencers helping to create a more financially savvy society, or are they simply adding to the noise in an already crowded space to make their own money?
#MoneyTok and Other Financial Content
TikTok’s #MoneyTok is a prime example of just how popular finance content is, rapidly gaining traction among younger audiences. This particular hashtag has amassed a staggering 27 billion views at the time of writing, full of short, engaging videos covering all sorts of financial concepts. These range from basic budgeting techniques and debt management strategies to insights into stock market investments and cryptocurrency trends. The appeal of these short, punchy videos lies in their simplicity and directness, often breaking down complex financial jargon into digestible, easy-to-understand snippets.
It’s all about making topics like savings plans and investment opportunities more appealing and less daunting. However, as TikTok in particular is very much about short-form content, it has to grab the attention quickly and be bite-sized in its information. When you compare this to YouTube, for example, more comprehensive, in-depth content can be found. Here, financial influencers can delve into topics in greater depth, offering step-by-step guides, detailed analyses, and even interactive Q&A sessions.
No longer confined to just financial advisors and the traditional banks, money management advice is readily available, often just a click or swipe away. This ease of access and the relatable manner in which it’s presented has meant a broader part of the population has been able to engage with financial education in a way that was not possible before. However, whilst that is great in one aspect, it also brings various challenges and concerns.
The Pros of Social Media Financial Advice
There are benefits to finance social media posts when staying vigilant with the advice you’re finding. Here are some key advantages:
- Easy Access To Financial Knowledge – Social media has played a pivotal role in empowering people with financial information. Platforms like TikTok and Instagram have opened the door to valuable financial insights straight to your smartphone.
- Engagement and Relatability – Finfluencers often use a conversational tone, relatable anecdotes, and real-life examples, all helping to make complex financial ideas and advice more understandable and engaging. This approach works well with younger audiences who might find traditional sources of financial advice intimidating or even dull.
- Encourages Financial Literacy – The mere presence of financial advice on social media has sparked a greater interest in personal finance among the younger generation. It acts as a springboard, encouraging people to delve deeper into topics such as budgeting, saving, investing, debt management, and financial wellness.
- Innovation and Creativity – Social media platforms encourage innovation and creativity in presenting financial advice. The use of infographics, interactive content, and storytelling can be more effective in conveying complex information than traditional methods.
- Community Support – Social media at its best can foster a sense of community, allowing people to share experiences, ask questions, and receive support. This can be particularly empowering for those who are embarking on a financial journey, whether reducing debt, building savings, or achieving their financial goals.
Depending on the sources of advice, the positive aspects of social media money advice are hard to ignore. However, it’s also crucial to consider the downsides of social media and finance related content.
The Cons of Social Media Money Advice
For all the positives on the surface, social media’s contribution to society has also meant plenty of questionable opinions, advice and ideas when it comes to finance. Here are some key drawbacks to consider:
- One-Size-Fits-All Approach – Much of the financial advice on social media can be generic and not tailored to someone’s circumstances. Personal finance is unique to you and what works for one person may not be suitable for another. This lack of personalisation can sometimes lead to misinformed financial decisions if someone applies general advice to their own specific situations without properly thinking it through.
- Questionable Credibility and Expertise – Not all influencers providing financial advice are qualified experts. The lack of regulation on social media means anyone can position themselves as a financial guru, regardless of their actual knowledge or experience. This can lead to the sharing of inaccurate, misleading, or overly risky financial advice that is not regulated by the FCA. In fact, the FCA blocked more than 10,000 misleading financial promotions and scams on social media in 2022, one of which was a finfluencer that promoted unauthorised traders to their followers on at least two occasions.
- Over-Simplification – To fit into short, engaging formats favoured on TikTok and Instagram, complex financial ideas are often oversimplified. This can be misleading, as it glosses over the details and risks involved, such as investing in stocks or cryptocurrencies.
- Risk of Scams and Misinformation – The anonymous nature of social media can also make users vulnerable to scams and misinformation. It can be easy for those wanting to take advantage to promote dubious investment schemes or products.
- Pressure to Fit In – Social media often creates an echo chamber effect, where certain trends or ideas become amplified. This can create pressure to fit in with a popular financial strategy or product being promoted, regardless of whether they are in your best interests.
- Emotional Decision Making – The emotive nature of social media content can sometimes lead to impulsive financial decisions, driven by the fear of missing out (FOMO) or the thought of quick gains, rather than careful planning and analysis.
Understanding these limitations is crucial for anyone turning to social media for financial advice.
How to Safely Navigate Financial Advice on Social Media
So, given the mixed bag of financial advice available on social media, it’s crucial to navigate any advice you find wisely. Here are some tips to help you make the most of social media’s financial insights while avoiding potential pitfalls:
- Who is the ‘finfluencer’?
Always approach financial advice on social media with a healthy degree of scepticism. The first thing you should do is check the profile of the person offering advice and consider their motivation. Are they selling a product or service? Is their advice based on personal opinion or solid financial principles? TikTok now flags videos where you should question this, providing advice on avoiding harmful financial decisions and how to report scams.
- Seeking Professional Advice
For personalised and reliable financial guidance, consider consulting with a qualified financial advisor rather than a random account on social media. They can provide tailored advice suited to your specific financial situation and goals.
- Expand Your Sources
Don’t rely solely on social media for financial advice. Look up what you find on social media and research information from reputable financial sources. Also, make use of helpful advice from sites like Money Helper and Citizens Advice. This broader approach ensures a more rounded and informed understanding of personal finance.
- Beware of Trends and Fads
Be cautious of financial advice that promotes trendy investments or ‘get-rich-quick’ schemes. Always research thoroughly before making any financial commitment, especially if it involves significant risk. The FCA have a ScamSmart feature where you can check an investment or pension opportunity to ensure it’s not a scam.
- Keep Learning
Treat social media as a starting point for your financial education, not the end. If you read up regularly on financial matters, it will help you develop a deeper understanding so that you can make more informed decisions.
Finance Social Media Posts – Proceed With Caution
As we consume so much information on a daily basis thanks to social media, we should be careful about what advice we take. When it comes to financial advice, platforms like TikTok and Instagram have their fair share of good and bad advice, so keeping this in mind before making any decisions on your own finances is important. It’s best to take the insights you find and investigate further to help give you a more informed understanding. By doing so, you can avoid the pitfalls that come with following unregulated advice on social media and protect your finances.
So, have you found valuable financial advice on social media? How do you tell if it is sound advice or mere noise? Find more helpful information and insights in our blog, including how to haggle, and how short term loans effect your credit score.