As young people continue to flock to TikTok for personal finance advice, experts warn of oversimplified concepts, misleading information and scams as the platform becomes plagued with “get rich quick schemes”.
Using the platform for personal finance advice can be risky if information from unqualified content creators or self-declared experts lands in the wrong hands. This is a particularly pressing issue for the younger generation who have just entered – or are about to enter – the labour market and are yet to learn about managing their finances.
“TikTok has become a popular platform for Gen Z to explore personal finance. Many young people are indeed learning valuable financial lessons, like budgeting, saving, and investing, from reputable sources,” said personal finance expert Carol Glynn.
“This can set them on a path towards better financial habits early in life.”
But this brings to question: does this, perhaps, make Gen Z the most financially-savvy young generation in history?
It may be a double-edged sword, Glynn warned, because not all content on social media is reliable or accurate. Overly simplified advice and misinformation can lead to potentially poor financial decisions, leading to financial ruin.
“There are far too many influencers talking about get rich quick schemes that are not realistic at best, scams at worst. Therefore, while TikTok can be a useful tool for learning about personal finance, users should approach the content critically and verify advice from multiple credible sources,” Glynn added.
While there has been a tremendous amount of good, credible advice on the platform, Glynn suggests that users should not refer to the content as their sole source of information.
Instead, users should refer to books, take online courses, or consult with finance professionals to gain a better understanding of personal finance concepts. In addition, she said they must do their due diligence when evaluating financial advice on any social media platform.
“Gen Z can benefit from the convenience of TikTok as long as they approach it with a discerning mindset. Being good with money is a personal thing, it’s about understanding your own needs, wants and goals in life and then applying that to how you manage your income,” said Glynn.
“While there is great advice out there, only you really know what is the best way for you, so don’t let someone else’s goals, risk appetite or biased opinion on what you should be doing with your money influence your money decisions. That is a sure road to financial stress.”
TikTok financial influencers
Some of the most followed personal finance influencers on the platform are:
- Tatiana Londono @tatlondono – Covers real estate investment
- Tori Dunlap @herfirst100k – Covers taboo financial topics and helping women save money and invest wisely
- Erika Kullberg @erikakullberg – Covers finance topics from a legal perspective
- Seth Godwin @seth.godwin – Covers savings
With over 16 million followers between the four influencers, many TikTokers are using their content to begin their financial journeys.
Risks of following finance advice online
However, advice found online can lack personalisation and the self-proclaimed experts may often lack accountability. This can also mean incomplete or misleading information, confirmation bias (due to TikTok algorithms), an overemphasis on risky strategies, or – in the worst cases – fraud and scams, Associate at Dubai-based law firm BSA Legal, Antoine Iskander, told Arabian Business.
“TikTok is a great platform for young people to learn about personal finance. It makes complicated financial ideas easier to understand and relate to. However, it is very important to understand that TikTok’s short videos cannot provide detailed financial advice. You should think of it as an extra tool for learning about money, not the main source,” Iskander said.
“While TikTok can give you ideas and help you get started, it’s important to be careful and not believe everything you see. TikTok should be used as an additional tool for learning about finances, supplementing traditional financial education. This will help people have a complete and informed approach to managing their money in the future.”
Content creators on the video platform must “substantiate claims with evidence or sources,” he suggested, to ensure greater transparency in financial discussions.
He added that the platform should emphasise the importance of diversifying investments and actively discourage overconcentration, and identity and remove fraudulent schemes while educating users about common financial scams.
To achieve this, TikTok could partner with reputable financial organisations, he said, and introduce educational features for accurate information.
“An accessible reporting system for misleading or harmful financial content is essential, with swift responses to user reports. By addressing these concerns and monitoring personal finance content, TikTok can create a safer, more informative environment and build trust among its user base.”
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