You might browse Reddit to catch up on the latest news and views. Or you may get sucked into watching lip-sync videos on TikTok. But a large number of Americans ages 18 to 41 are turning to social media for something far more serious—advice about credit card debt and other financial matters.
A survey commissioned by Forbes Advisor and conducted by market research company Prolific found that 79% of members of the millennial and Gen Z generations have gotten financial advice from social media.
But should millennials, Gen Zers or anyone else rely on social media to guide decisions about their money? Opinions among personal finance professionals are split.
Key Survey Findings
- 79% of Americans representing the millennial or Gen Z age groups have gotten financial advice from social media
- 76% believe financial content on social media has made it less taboo to talk about money
- 62% feel empowered by their access to financial advice on social media
- Reddit and YouTube are the most trusted platforms for financial advice
- 50% have made money as a direct result of financial advice they received on social media
Should You Trust Personal Finance Advice on Social Media?
Chartered retirement planning counselor Jake Falcon, founder and CEO of Falcon Wealth Advisors, is skeptical about following financial advice spread on social media platforms.
“There are a few gurus out there that can speak to general advice, but the reality is that each individual is different and what applies to one person may not apply to another,” Falcon says. “A big con from getting advice on social media is that the person offering the advice may not be qualified to do so.”
On the other hand, certified financial planner Brian Walsh, manager of financial planning at online financial platform SoFi, doesn’t believe in discarding all personal finance information you come across on social media. For instance, if you follow the right folks on Twitter, you may find “valuable and diverse” information about personal finance, he says.
“Social media tends to get a bad reputation when it comes to personal finances, but that is extremely unfair,” Walsh says. “Fortunately, good examples of sound financial advice on social media outweigh the bad. You just have to know where to look and how to distinguish between the two.”
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Social Media Platforms Are Inundated with Talk about Money
The vast majority of millennials and Gen Zers say they’ve picked up financial advice from social media. But where do they most often obtain financial information? Millennials favor Reddit, while Gen Zers prefer YouTube.
Nearly 7 in 10 of those surveyed (69%) encounter financial advice on social media at least once a week, and 1 in 4 stumble upon it every day.
Social Media Sources Where Young Adults Receive Financial Information
Most Trusted Social Media Site for Financial Information
Walsh says there’s really no barrier to offering and absorbing financial information on social media platforms.
“That means people can easily provide and access information. But when it comes to something as important and complex as personal finances, it worries me because there is no one-size-fits-all approach,” he says.
As such, social media can elevate bad, irresponsible approaches to achieving financial goals, particularly since someone dispensing financial advice might not be qualified to do so, Walsh says. In the survey, just 31% of millennials and Gen Zers regularly check the experience and qualifications of people who supply financial advice on social media.
Outside of social media, those surveyed primarily get financial advice from family (35%) and internet searches (33%). The use of financial advisors is comparatively rare (11%).
Walsh recommends LinkedIn and Twitter as the best social media sources for reliable insights about personal finance.
“Both of these platforms allow people to provide context, which is extremely valuable when it comes to personal finances. Other platforms tend to offer much shorter content that often lacks context,” he says. “I stress context because there are not many absolutes in personal finance.”
Using Social Media for Budgeting Advice, Not ‘Get Rich Quick’ Schemes
As you’re browsing social media platforms, a flurry of financial topics pop up, such as stock and bond tips (the most common topic spotted by survey respondents, at 57%), recommendations about debt reduction or guidance on retirement savings. The two least commonly seen topics among those we surveyed were get-rich-quick schemes (11%) and borrowing money (7%).
Types of Advice Young Adults Receive on Social Media
Half of the people surveyed say they’ve made money as a direct result of financial advice on social media, but 28% say they’ve lost money.
“Unfortunately, anyone can post anything online without consequence—including bad or inaccurate advice about money management,” says certified financial planner and certified private wealth advisor Rick Nott, a senior wealth advisor at LourdMurray. “I’m a regulated advisor. There are some things that I just can’t say, and for good reason. You don’t get that filtering online.”
Falcon recommends depending on social media only for general education about financial matters, and then seeking in-depth advice from a certified financial professional.
Certified financial behavior specialist Cara Macksoud, managing director and CEO of the personal finance platform Money Habitudes, notes that younger people may be more inclined to follow advice dispensed by people from their own generation than from other generations. But that generational advice comes with a dose of caution.
“Gen Zers idolize influencers, many of whom are being paid to promote financial advice, such as advice about crypto,” Macksoud says. “What these influencers are leaving out is the risks and understanding that are needed to manage those types of investments.”
Related: Is Hiring a Financial Advisor Worth It?
Financial Advice on Social Media Is a Boon for Historically Disenfranchised People
While financial professionals urge great caution in adopting financial advice from social media, 78% of those surveyed believe they have more access to financial advice now than they would have as part of previous generations because of their identity, such as race, gender or income.
In the survey:
- 72% of Black respondents think their race would have historically been a barrier to obtaining financial advice
- 65% of women feel the same about gender
- 57% of people earning less than $35,000 say their economic status would have been a barrier to getting financial advice
Meanwhile, more than three-fourths (76%) of millennials and Gen Zers think financial content on social media has made it less taboo to talk about money, and 62% feel empowered by their access to such information on social media platforms, including 75% of Black respondents.
In addition:
- 73% report that social media has improved their financial literacy
- 66% believe they’re more financially literate than previous generations
- 66% believe they’re more financially literate than their parents were at the same age
Although social media has made financial advice more democratic, certified financial planner Carl Holubowich, a principal at Armstrong Fleming & Moore, warns that young people should be on the lookout for social media-driven financial scams.
In a 2022 study, the Federal Trade Commission (FTC) noted that among 2021 fraud reports citing the victim’s age, Americans ages 20 to 29 represented 41% of fraud losses, compared with 18% for people 70 to 79.
“Virtually anyone can fall prey to fraudulent crimes,” says the U.S. Department of Justice. “Con artists do not pass over anyone due to such factors as a person’s age, finances, educational level, gender, race, culture, ability, or geographic location. In fact, fraud perpetrators often target certain groups based on these factors.”
In 2021, more than 95,000 people reported about $770 million in losses to fraud initiated on social media platforms, according to the FTC. Those losses accounted for about one-fourth of all reported fraud losses in 2021. Those numbers prompted the FTC to brand social media as a “gold mine for scammers.”
Bottom Line
Social media is not going anywhere, of course. But neither is the presence of financial advice—and scams—on social media platforms.
Still, social media has broken down some barriers in personal finance. Many millennials and Gen Zers say platforms like Reddit and YouTube have made the subject of money less taboo, boosted their feelings of empowerment and, in some cases, generated more money.
That being said, millennials and Gen Zers should keep their guard up when it comes to financial advice on social media about subjects ranging from stocks to cryptocurrency. After all, the survey found that just 1 in 3 of people aged 18 to 41 had vetted the sources of financial advice on social media.
“Be skeptical. Don’t take everything you read at face value,” Nott advises. “Instead, approach the material with an analytical eye, and ask yourself if this makes sense or if something doesn’t add up.”
Methodology
This online survey of 1,009 U.S. adults of the millennial and Gen Z generations was commissioned by Forbes Advisor and conducted by market research company Prolific. The margin of error is +/- 3.1 points with 95% confidence. Data was collected from January 4 to 6, 2023.
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