TikTok has become a bubbling cauldron of hot personal finance trends in recent years, with Gen Zers using the short-form video app to learn about everything from “cash stuffing” to “loud budgeting.” But is most TikTok personal finance advice actually good for people? Or are TikTokers vulnerable to financial misinformation that could hurt their bank accounts?
The verdict is mixed. Some studies of social media personal finance information show that people are getting some worthwhile help with saving and budgeting. But TikTok personal finance advice might encourage people to listen to untrustworthy influencers and make risky investments.
Let’s look at the landscape of TikTok personal finance advice, and see what researchers think about its effects — both good or bad.
76% of Gen Z learns about personal finance from TikTok and YouTube
A recent survey from WallStreetZen found that 76% of Gen Zers are learning about personal finance from TikTok and YouTube, and TikTok is the most popular social media platform for this kind of self-taught financial education. The topics that Gen Zers are most likely to learn about on social media are:
- Budgeting (81% of respondents)
- Passive income (63%)
- Stock investing (59%)
On the one hand, it’s good if TikTok videos are teaching young adults to understand budgeting, spending, and saving. The “loud budgeting” concept is actually a brilliant idea. People declaring healthy boundaries around money and pooh-poohing the concept of flashy “FOMO”-driven spending is probably a net positive for the world.
But not all financial information on TikTok is helpful, healthy, or even well-intentioned. One person’s “passive income strategy” is another person’s “get-rich-quick pyramid scheme.” And as for buying stocks, Gen Zers who look to TikTok for stock-buying advice might be more vulnerable to pushy sales pitches from sketchy stock-picking gurus.
TikTok: Too much bad information about buying stocks
Another WallStreetZen study of TikTok financial advice found that 63% of stock advice on TikTok’s stock-related hashtags is misleading. A whopping 95% of TikTok’s investing content doesn’t have any disclaimers, and only 0.8% of TikTok stock influencers have relevant qualifications. This is not the standard you would look for in a financial advisor.
Why is TikTok stock advice so potentially dangerous? Because it’s making big promises and encouraging people to take risky actions with their money:
- 36% of the misleading stock advice on TikTok pushes viewers to buy specific stocks
- 22% of TikTok stock advice videos are making excessive promises about specific returns on investment, advertising average annual returns of 600%
- 7% of the videos encourage viewers to put a specific portion of their money into the stocks being discussed
Promising 600% annual returns is not realistic, and these pushy behaviors are not something that reputable financial advisors or stock market analysts would do. The Motley Fool Stock Advisor does not act this way. TikTok should be a happy place to watch comedy videos and learn fun dance moves, not a sweaty boiler room where an aggro stock broker tries to trick you into betting your life savings on a dicey stock.
However, the good news is: Gen Zers do not appear to be taking everything they see on TikTok too seriously. Another WallStreetZen study found that 83% of Gen Zers agree that they have seen misleading information about personal finance on social media, and 82% agreed that the short-format videos of TikTok can lead to oversimplification of complex financial topics.
If Gen Zers can maintain a healthy skepticism about TikTok personal finance, especially about picking investments, they might end up doing just fine. Don’t get all your investment information from short videos — get it from qualified experts.
More good news about TikTok personal finance advice
Sketchy stock picks and get-rich-quick schemes aside, there really is some good information on TikTok that can help Gen Zers make better money moves. Bloomberg columnist Alison Schrager, who’s also an economist at the Manhattan Institute, recently analyzed some TikTok personal finance videos.
In a February 2024 Bloomberg article, Allison Schrager wrote that “TikTok is not the worst place to learn about personal finance,” and “I found a lot of sound financial advice on TikTok. Unlike academic papers in economics journals, TikTok videos are engaging and short, and they are practical in a way that most economists just aren’t.”
Schrager praised the advice she saw from TikTok influencers who encouraged people to have an emergency fund in a high-yield savings account, keep a budget, and invest in an S&P 500 index fund. She also appreciated how TikTok influencers show people exactly how to open a brokerage account and select funds to invest in, instead of assuming that everyone knows how to do this for themselves. More practical advice on how to buy stocks can be valuable, especially for people who are just getting started as investors.
Bottom line
Every generation has to find its own way in the world, and if Gen Zers are getting useful, thoughtful, practical advice about personal finances on TikTok, that’s good. But if you use TikTok for stock picking, or if you’re hearing too many big promises about how wealthy you can get overnight by signing up for some guru’s expensive online course…you might want to close the app and go for a walk.
TikTok personal finance advice can be a useful starting point to learn about budgeting, saving, and the basics of investing. But don’t assume that any one social media app has all the answers, and don’t risk money on trendy TikTok stock picks that you can’t afford to lose.
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