Social media platforms like TikTok have made personal finance topics more engaging, but they’ve also increased the risk of misinformed advice. For example, Gen Zers are nearly five times as likely as adults older than 41 to say they get financial counsel from social media, according to a CreditCards.com survey.
Platforms like TikTok—particularly content shared under the #FinTok hashtag—make it easier for young people to learn about money in an engaging and accessible way.
This content has empowered more young people to take an interest in their financial futures, said Leasa Melton, manager of product strategy at BOK Financial®. "So long as you’re practicing discretion, this can be a great step forward as it promotes financial literacy and proactive money management.”
However, there are risks, she and others caution. For instance, if you're getting financial advice on social media, you might also be exposed to risky money trends, often shared by unverified financial influencers, or "finfluencers." While anyone on the internet may claim to be an expert, in the case of financial advice, it is important to verify credentials, experts said.
"Social media influencers may blend useful advice with financial trends that may carry risks and lack accountability online," Melton warned. "As financial information and advice is shared more widely, it can become difficult to tell the difference between reliable advice and entertainment. This can lead to misinformation and risky financial decisions in some cases, so it’s important to take precautions."
While some finfluencers offer balanced views, others may glorify potentially high returns without adequately warning about the high risks involved. For example, they may promote volatile investments like cryptocurrencies, speculative strategies and get-rich-quick schemes that may seem too good to pass up.
However, only 20% of finfluencer content with investment recommendations includes any form of disclosure, according to the CFA Institute, an organization that promotes ethics and standards in the financial industry. Without this transparency, it's easier to make impulsive decisions without fully understanding the consequences. Disclosures typically inform you about potential risks, conflicts of interest, or the speculative nature of investments—important details that help you weigh whether an investment fits your financial goals and risk tolerance.
As these trends gain more attention, don’t shy away from learning about investing. Just be sure to understand the potential risks and rewards before jumping in, experts recommend.
Keeping up with the lingo
If you’ve spent time on #FinTok, you’ve likely encountered a variety of financial terms. These terms reflect economic challenges such as rising student loan debt, housing affordability issues and an unpredictable job market. You might recognize some of these terms, such as:
- Loud budgeting: Being vocal about your financial goals, spending limits and decisions to promote transparency and accountability, as well as to help you stick to your budgets through peer support and confidence.
- Cash stuffing: A modern twist on envelope budgeting where you withdraw cash and divide it into categories to manage spending.
- Soft savings: Prioritizing well-being and present enjoyment over aggressive saving. This approach reflects how Gen Z responds to pressures like inflation and student loan debt while still aiming for financial stability.
- Doom spending: Triggered by anxiety and uncertainty, doom spending involves excessive spending on luxury items or experiences to cope with stress.
- Free money: Also known as "girl math," this term describes spending strategies that don’t directly impact your bank account balance, such as using store credits and cash back, as well as justifying spending on sale items because the savings make the purchase feel "free."
“While these terms may seem silly or lighthearted, understanding them is important. They shed light on real financial pressures the younger generation is facing as they attempt to navigate the journey toward financial independence and stability.”- Jennifer Ellis, a senior consumer product manager at BOK Financial
Gen Z financial challenges
If you’ve already realized that the road toward financial independence is tough, you’re not alone. A recent survey revealed that three in 10 Gen Z and millennial respondents reported not feeling financially secure and roughly six in 10 said they live paycheck to paycheck. These concerns are real:
- As of September 2024, the unemployment rate for 20–24-year-olds in the U.S. rose to 7.0%, compared to the 3.3% rate for workers over 25, according to the U.S. Bureau of Labor Statistics.
- As of 2022, Gen Zers had an average student loan debt of $20,900, or 13% more than the average millennial.
- Around 31% of Gen Z adults live with their parents because they cannot afford to rent or buy their own homes due to rising housing prices and rent.
Making smart money choices online
“These financial challenges are real and will continue to become more complex as Gen Z gets older,” said Melton. “I’m excited to see the enthusiasm around learning about complex financial topics, especially with the current economic challenges—I just encourage young adults to consider multiple sources of information before making financial decisions.”
With so much of life happening online, it’s important to pay attention to where your financial information comes from and how you evaluate it as you start managing your own finances. Understanding the influence social media has on your financial decisions is key to making informed choices and addressing money concerns effectively.
"By thinking critically and keeping an open mind, you can make smarter financial decisions as you move toward financial independence," said Melton.
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