Here is a fact. If you drop the name Rishi Sunak in a conversation that takes place between 16-17 year old boys, the chances of them knowing who it is, is only 37%. Drop the name of Andrew Tate in that same circle and the chances of them knowing him is twice the previous number. This gargantuan gap comes as no surprise. Especially considering how the controversial preachings of Tate-ism is accepted as the word of the bible by many male Gen Z’ers. And when I say male Gen Zs, it is by no means a stereotyping or an exaggeration, but rather an inference drawn as a result of available data and statistics.
While his preachings about toxic sexism, misogyny and male emancipation had a steel grip on the younger generations to the point where it almost seemed like an uprising of a cult, what tempted most to cave in was the ‘financial’ advice that Tate handed out ‘free-of-charge’, on social media platforms like TikTok. He was many things, but he was also celebrated as a ‘finfluencer’- a financial influencer of sorts. And this phenomenon of Gen Z seeking financial advice on social media is nothing new, considering how most of them have had a social media presence for more than half of their lives, and also because they are stressed about finances and are looking for a quick fix.
Are TikTok, Instagram, Twitter and Youtube the new financial gurus?
Make way, financial advisors. Looks like social media platforms have become the go-to for younger generations seeking financial advice and it does not look like it will change anytime soon. Apparently, Gen Z is five times more likely to place their utmost trust in social media, than individuals aged 41 and above. While TikTok has become everyone’s favourite choice, an interesting development is how Elon Musk’s vision of transforming Twitter into a hub for financial services is luring in the Gen Z crowd.
In recent times, social media platforms have emerged as the primary sources of financial guidance for younger millennials and Gen Z individuals. According to a survey conducted by Forbes Advisor in 2023, targeting the American population, a significant 79% of millennials and Generation Z individuals have turned to social media for financial advice. 76% believe that financial content on social media has decentralised talks about money and made it less taboo. 62% feel empowered by their unregulated access to financial advice on social media. 50% of the individuals reported making monetary gains directly attributable to the financial advice they received through social media.
The subjects they seek advice on are diverse. Among these, the most prevalent area is investing in stocks and bonds, as cited by 57% of young adults who participated in the survey. Personal budgeting follows closely at 51%, while passive income strategies (49%), debt reduction (40%), and credit building or enhancement (37%) are also among the top five topics of interest. Additionally, while the platforms via which they get crash courses on financial literacy vary, data shows that most alternate between Youtube and Reddit or TikTok and Instagram.
According to a survey done by Forbes on 1,009 U.S. adults in January 2023, Reddit was ranked as the most trusted social media site for financial information with a number of 37%. Youtube followed closely with 34%. TikTok (14%), LinkedIn (7%), Twitter (4%), Instagram (3%) and Facebook(2%) completed the list accordingly.
Interestingly, there is a reason why social media has become the knight in shining armour. In an article that addresses the question of ‘Millennials and Zoomers: Is Social Media Increasing Awareness’, Ashleigh Ray; the author, quotes Jake Hill, CEO of DebtHammer, where he says, “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 that they may or may not end up using”.
Social media exposes the flaws in the traditional financial education system by offering accessible insights into diverse financial tools. These tools help the average consumer to understand how the world of financing works. They also have the potential of exposing the flaws in debt systems that most countries operate on. While not all, some of these social media platforms do pull through with solid advice on how to find one’s footing in the financial system. This is because there are actual financial experts and organisations that have a pervasive presence in the online world who provide advice from a professional vantage point. And they are mostly relatable. So it is only natural that the young generation gravitate towards it. However, this is not always the case.
The loopholes in the world of ‘finfluencing’
While this trend might seem beneficial at first glance, there are potential pitfalls associated with acquiring financial knowledge from social media. It’s essential to recognize that not all information on these platforms is accurate or tailored to individual circumstances. Relying solely on social media for financial education could lead to misconceptions or misguided decisions. No one is denying that some of this advice is top tier. Some of them are average at best. But some are downright terrible, which is why it is always better to be aware of what advice needs to be binned.
It’s crucial to approach financial advice obtained from social media with a critical mindset. Due diligence is necessary to verify the credentials and expertise of those providing advice. Do your homework on the sensational finfluencers that you are tempted to follow. Furthermore, financial matters are often complex and individualised, and a one-size-fits-all approach might not be suitable for everyone. Engaging with qualified financial professionals or seeking advice from reputable sources outside of social media can provide a more well-rounded and accurate understanding of personal finance.
The inclination of younger generations to seek financial advice on social media platforms is noteworthy. And it is actually commendable that social media makes having diverse and valuable financial advice at your disposal a reality. Therefore, it is unwise to discard all the information that these platforms provide. However, it’s important to exercise caution, critically evaluate the information, and supplement it with guidance from qualified experts to make informed financial decisions. Do not take everything at face value, especially not things that involve your (or your parents’) hard earned bread.
(Sandunlekha Ekanayake)