It should go without saying: Never take financial advice from an app notorious for spying on life-threatening trends. But it seems Gen Z never got the memo. According to Barrons, more than a third of Americans in this age group prefer financial advice on TikTok over tips from a certified advisor.
Anyone can claim to be an internet financial expert. Social media platforms are full of charlatans looking to cheat you out of your money. Tap or click here for details on trending scams, from fake sweepstakes to fake coupons.
Even headlines about multimillion-dollar lawsuits by crypto celebrities can’t shake Gen Z’s faith in financial advice from strangers on the internet. When we heard this news, we searched for the worst financial advice on TikTok. You won’t believe people actually follow these money tips!
Warn your family about terrible financial advice on TikTok
In the past, we have written about the many shortcomings of TikTok. You might agree with FCC commissioner Brendan Carr, who says TikTok is a threat to national security. But even if you avoid it, we bet you have friends and family who still love TikTok.
Your loved ones may find bad advice. Remind them that some things are worth paying for— especially financial advice.
Financial misinformation is all over “FinTok,” the popular term for the personal finance section of TikTok. Users who know nothing about personal finance see FinTok as an easy-to-use tool for beginners. They think they can learn financial lessons in short, one-minute videos.
However, many of the most prominent FinTok leaders lack credentials or experience. They’re just randos talking confidently into a camera.
One in seven personal finance videos on TikTok contains misleading financial information.
From BBC News
Many TikTokers encourage viewers to make risky financial decisions. However, they did not explain the results.
Take a stranger’s free tips and you could find yourself thousands in debt. The person who claims to be knowledgeable may just be parroting something they read online but don’t fully understand. Here are some of the worst takeaways from the so-called “financial experts” on TikTok.
1. They tell you which stocks will make you rich in 2023
TikTok financial gurus love to make short videos that tell you which stocks to buy. However, they rarely mention their sources. Sometimes, they mention random stocks that they can barely check.
Don’t buy stocks based on the advice of a stranger on the internet. Carefully research the stock’s past performance over the past year. Determine the risks before you buy anything. Also, remember that some TikTokers may have ulterior motives. They can recommend the stocks they are already invested in so they can artificially increase the demand and price of the share.
2. They tell you to invest in cryptocurrency
Like stocks, crypto requires thorough investigation. Tons of celebrities, from Kim Kardashian to Shaq and Tom Brady, have come under fire for promoting crypto. A fan is suing his idol Tom Brady for promoting a cryptocurrency that later performed poorly.
Remember that celebrities are paid big to endorse products – including crypto. As tempting as it may be to trust your favorite actor, musician or reality TV star, you should know that they don’t have your best interests at heart. They think of fattening their bank accounts. They don’t care about your financial well-being.
RELATED: Beginner’s guide to buying cryptocurrency
3. They suggest the snowball debt method
This is a common strategy that people use to lower their debt. The advice says to pay off the cards with the lowest balance first. That way, you’ll be encouraged to pay off cards with higher balances.
However, TikTok advisors don’t mention the critical part: You also need to pay off your other debts. Young and naive TikTok users hear about the scheme and think they just need to pay off their small debts. Then, they leave more debt on the side of the road. This causes more issues later and affects their credit scores.
4. Common financial advice on TikTok pushes you into day trading
You don’t need a college degree to start day trading. But you need a ton of time and economic knowledge to succeed.
Many TikTokers make day trading easier than ever. It involves a ton of risk, so it’s better to build an investment portfolio over time.
5. Many TikTokers say you shouldn’t pay off your student loans early
This is a bad idea because student loan debt can get very high. The so-called financial advisors on TikTok often tell their followers to invest the money they would have spent on paying off loans in investments.
That was a risky decision. Wait too long to pay off your debts and the interest rate can turn your debt into an impossibly high number. Instead of going all out, play it safe and pay your debts regularly.
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