TikTok: The New Financial Advisor for Gen Z?
The curtain rises on a new stage where Gen Z, the digital natives of our time, are turning to social media for financial advice. TikTok, a platform known for its short-form videos and viral dance trends, is now home to a growing financial community. With the hashtag #FinTok garnering over 4.5 billion views, it’s clear that financial advice has found a new, unexpected home.
A New Generation’s Financial Compass
The power of social media has extended its reach into the realm of personal finance. A recent survey found that 34% of Gen Z is seeking financial guidance through platforms like TikTok. In fact, almost 20% of college students in the US are frequently turning to social media for financial counsel. This trend is a departure from conventional methods of seeking financial advice, such as consulting with certified financial planners or reading finance-related books and articles.
Proceed with Caution: The Dangers of #FinTok
While social media platforms provide quick access to financial knowledge, their lack of filters to help users discern trustworthy information raises concerns. Brian Walsh, a certified financial planner and head of advice and planning at SoFi, warns of three red flags to be wary of when following financial advice from influencers. Firstly, skepticism towards ‘too good to be true’ financial plans that promise quick riches is advised, as these could be potential scams. Secondly, he urges caution with influencers who take extreme stances or speak in absolutes about financial topics. For instance, not all debt is equal, and high-interest debts like credit card balances should be prioritized for repayment.
The Changing Face of the Middle Class
Alongside this shift in financial advice sourcing, Gen Z’s perception of what constitutes a middle-class salary is also evolving. A Newsweek survey conducted by Redfield & Wilton Strategies found that only 41% of Gen Z respondents considered a salary of $74,580 as middle class. This skepticism is largely due to the rising cost of living, particularly housing and higher education. With inflation at 3.1% and an average student debt of $30,000, Gen Z is facing soaring housing prices and uncertain job prospects. As a result, many are engaging in ‘hustle’ culture and taking up side jobs. In fact, a global survey by Kantar found that 40% of Gen Z employees are working another job on the side.
In a world where financial stability is increasingly elusive, Gen Z’s turn towards social media as a financial compass reflects a larger shift in how we perceive and manage finances. As we traverse this new terrain, it becomes crucial to distinguish between reliable financial guidance and potentially fraudulent advice, in order to navigate the complex landscape of personal finance.