Staying safe on social media
We have access to almost anything online, including financial advice. Influencers offering money tips are trending on social media, but their advice could be misleading followers. Local financial professional Barry Bigelow from Great Waters Financial has three key questions to consider before hitting "like" on the latest financial trends.
Nearly one-third of Americans trust the financial advice they read on social media from influencers and celebrities. Social media can be a helpful tool for sharing advice, because it allows professionals to bring information to followers in a quick and easy way. However, trusting celebrities and influencers without proper certification or education about budgeting, investing and saving can put your money at risk. People have lost $316M in the first quarter of 2022 because of social media scams or fraud. Although good information exists on social media, everyone should be cautious about trusting every post they scroll through.
There are a few questions people should ask if they want to know if a post is trustworthy. The first question should be what is the motivation of the person making the post? Take into consideration the intention behind the post or video you’re looking at. Is there a product or class they want you to purchase? Is there a tool they need you to buy? For many influencers, their “educational videos” are about earning marketing dollars. Even those defined as “micro-influencers” with less than 50,000 followers can earn up to $100,000 per year. Influencers on social media aren’t necessarily sharing their expertise or certified training knowledge. They’re often just trying to make a living off of your engagement.
Question number two is what costs are not being counted? Social media videos typically have about 60 seconds to capture your attention, so influences have to get their message across quickly. Consider the costs, risks and hidden fees left out of the video for the sake of time. For example, a video may tout how easy it is to make money off an Airbnb property. Buying a second home as a property has a huge buy-in cost, including a 20% down payment on the purchase price. There’s always a cost of entry to a new investment or financial hussle, and many people don’t have the kind of equity required. Some ideas may sound nice on the surface, but it’s important to remember the hidden costs.
The last question to ask is why are you chasing more? Social media plays on users always wanting more, and it’s important to remember that influencers are called influencers for a reason. In a survey by TikTok, 67% of users said they were influenced to buy something even when they weren’t specifically looking to purchase anything. It’s critical to ask yourself why you want more money and consider what success means to you. Getting more money for the sake of having more isn’t a good enough reason to put your money at risk. Long-term goals should have a carefully thought out plan that includes budgeting, saving plans and wise investment strategies, which often doesn’t align with the get-rich-quick schemes influencers share about.
You certainly can still use social media to get some advice and tips, but the key is to find trustworthy sources with good intentions. Look for professional pages run by certified financial advisors or educational databases. Some people are visual learners and absorb information best from quick, snappy videos like on Instagram or TikTok. It’s okay to use social media as a learning tool, as long as it’s from a reliable source. There are financial advisors you can trust sharing resources like the ones you’ll find on social media platforms at Great Waters Financial.
The knowledge on your social media feed, whether it’s from a reliable source or not, isn’t specific to your situation. There are over 4.6 billion people on social media, which means posts are trying to relate to a wide variety of people, and the advice that may work for some won’t work for all. It’s valuable to take the conversation off of social media and meet with a financial professional who can understand the whole picture of your financial situation. Your income, expenses, savings goals, debts and retirement dreams are unique and any advice consumed on a large-scale platform like Instagram or TikTok won’t address your unique needs.