Navigating the realm of finances can be challenging, and often, social media appears to offer clarity. Users frequently share their financial struggles online, which can foster a sense of openness to their advice, primarily because it is freely accessible.
On platforms like TikTok, influencers may recommend obtaining a high-yield savings account or advise against it. They may provide guidance on investing, finding a well-paying, enjoyable job, identify potential financial mistakes, and even break down their paychecks. Some influencers critique the very advice that followers may be adhering to.
A recent report by Edelman Financial Engines revealed that “more than a quarter of social media users (and 42% of those in their 30s) believed financial advice or information encountered on social media that turned out to be false or misleading.”
Given that a majority of the population uses social media and many spend over three hours daily on these platforms, exposure to “curated lifestyles and consumerism” can have detrimental effects. The report indicates that a quarter of users experience dissatisfaction with their personal wealth after comparing themselves to those online, with younger generations feeling this more acutely.
“Americans, who tend to spend the most time on these platforms, are particularly vulnerable: 42% of those in their 30s have fallen prey to bad advice, and 2 in 10 (19%) have been duped multiple times,” the report states. Additionally, men are more likely to believe misinformation online.
This trend coincides with young people, particularly those aged 22-24, being more likely to be delinquent on credit cards and car loans compared to the preceding generation. Gen Z debt levels have risen faster than their incomes, and it is not surprising that many individuals seek almost any measure to escape debt. According to the Edelman report, half of all Americans in debt would disclose private information online if it meant their debt could be erased.
The report advises against letting social media scrolling influence financial decisions. Despite the increasing time spent online, it cautions against lowering one’s guard to bad advice and misinformation. It emphasizes that younger generations are most susceptible, urging parents to guide their children towards qualified professional advice over viral social media trends.