Given the amount of time that many of us spend on social media, it’s not surprising its influence has extended to our financial lives. The effects can be positive — some say financial content on social media “has made it less taboo to talk about money,” fostered a feeling of financial empowerment and even resulted in making money, Forbes said.
But in other cases, the impact of social media doesn’t bode so well. “Nearly two-thirds of Americans (65%) believe social media has led to increased overspending,” and approximately 18% “say they have made a regrettable purchase as a result of something they saw on social media,” said NerdWallet after conducting a study on the topic in 2023. There’s also the reality that not everything you see online is right, or right for you.
In other words, if you are going to let social media into your financial life, it’s important to be aware of the potential pitfalls and know how to use it as a tool that works for you, rather than against you.
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When used wisely, social media can serve as a convenient resource for money tips. Just remember that it’s a double-edged sword. While social media “can be a great place to get new ideas about how to manage your money,” said NerdWallet, it can also “lead to envy, romanticizing unattainable goals and exposure to faulty advice.” Similarly, not all content is created equal.
Still, some experts argue that the potential benefits outweigh the pitfalls when it comes to using social media for money guidance. “It removes a lot of the barriers that have traditionally been in place for young people and especially people of color,” Mandi Woodruff-Santos, a career coach and podcast host, said to NPR.
The format can make the often nebulous world of finance feel more digestible, and introduce new information and points of view that people may not otherwise encounter. In fact, it’s possible that “one of the reasons people keep coming back to social media, despite their doubts about some of the advice they find there, is that they find the stories, tips and hacks relatable in a way personal finance advice from traditional sources isn’t,” said Dan Egan, a VP of behavioral finance and investing at Betterment, in an interview with CNBC Select.
If you are learning about personal finance on social media, it’s important to view it as one tool in your arsenal — not the be-all, end-all. In other words, you should “largely view what you read, hear and watch on social media as initial information gathering that you can then further investigate before making any big-dollar decisions,” said Egan to CNBC Select.
It’s also important to do some research on your source, “checking their credentials,” searching “for negative reviews or feedback from others before listening to their advice,” and looking out for any red flags in the messaging, said NPR. In general, you will want to be “wary of anyone promoting a specific product or strategy without knowing your unique circumstances.”
Lastly, filter any suggestions you see through your own personal financial goals and financial situation. What works for someone else may not be appropriate for you.
Social media may be appropriate for “general education about financial matters,” but consider “seeking in-depth advice from a certified financial professional,” said Forbes, citing Jake Falcon, the founder and CEO of Falcon Wealth Advisors.
Beyond hiring a professional, there are also a slew of online resources outside of social media that you can tap, such as robo-advisers and budgeting apps. Also check what resources are available through your workplace or the financial institutions where you have existing accounts. For many, trusted friends and family members are an additional wealth of information.
