Did you know that approximately 80% of millennials and Gen Z seek financial advice from social media platforms like TikTok and Instagram? This statistic, revealed by a survey commissioned by Forbes Advisor and conducted by Prolific, discloses a significant shift in how young adults manage their finances.

The Influencer Impact on Financial Behaviors

It’s an interesting fact that 50% of these young adults attribute their earnings to financial tips from social media platforms. This trend is so prevalent that an annual FinTok awards event is hosted by Debt.com to celebrate the best financial content creators on TikTok.

However, it’s worth noting that only 33% of young adults receive useful financial advice from their parents, according to The Zebra survey. The rest learn their spending and saving habits from their peers, influencers, and even through their parents’ financial mistakes.

Negative Impacts of Financial Advice on Social Media

Despite the rise of financial influencers, there are also downsides to this social media financial advice trend. For example, the pressure to keep up with others’ financial status often leads to overspending and financial distress, further escalating FOMO (Fear Of Missing Out).

Moreover, a study by Qualtrics for Intuit’s Credit Karma reveals that about 40% of millennials and Gen Z experience financial insecurity or money dysmorphia, mainly due to comparisons with their peers and celebrities.

The Need for Reliable Financial Education

Though ‘finfluencers’ provide a vast amount of tips and tricks, the quality of their advice can vary. It becomes crucial to differentiate between useful tips and misleading information to avoid potential financial pitfalls. While social media can serve as a starting point for financial education, it should not be the only source of information, particularly due to the emergence of microtrends like quiet luxury, loud budgeting, and cash stuffing that may have short-term benefits but can lead to long-term financial issues.

Financial Professionals vs. Social Media Influencers

Despite the unfettered access to financial advice on social media, it is still important to consult with financial professionals who are educated, licensed, and regulated. They are bound by a fiduciary responsibility to act in their clients’ best interests, unlike social media influencers. Therefore, consider both professional advice and social media information for making informed decisions regarding your finances.