In the social media age, you can find information about anything online.
This has surely been a good thing in many areas, with communities of like-minded individuals able to connect, teach, and learn even more about the things they’re interested in.
However, this also means that many people, particularly millennials and Generation Z, are now exposed to all sorts of questionable financial advice on social media.
Some of this advice is of startlingly low quality, while a proportion of it is plainly fraudulent, designed to intentionally scam people out of their money.
If you have children or grandchildren finding their financial advice on social media, it may be worth having a conversation with them to make sure they’re finding the right type of information.
More young people are turning to social media for advice
With social media use so prevalent in younger generations, it should come as no surprise that many are now finding financial advice via platforms such as Twitter, TikTok, Facebook, and Reddit.
According to Oxford Risk, a behavioural finance firm, 20% of under-35s who invest used social media channels to inform their investment strategy last year. Meanwhile, just 4% of those over the age of 35 said the same.
The issue with this is that advice on social media is unregulated, often provided by unqualified influencers who can’t possibly know what’s best for their individual followers.
This situation has got to the point where social media platform TikTok have had to ban financial promotions for investments on their app. The UK’s main financial regulator, the Financial Conduct Authority (FCA), has also issued a warning over “risky” trading tips on TikTok.
Despite these efforts, influencers on the platform are still unregulated. That means young people could be exposed to low-quality advice that could have a severe negative impact on their pockets in the short term, and potentially set them up with bad spending behaviours for the future.
Young people are anxious over money
The plethora of poor financial advice circulating on social media platforms is only half the story. The other major issue is that young people have become increasingly anxious about their finances over the past year.
According to FT Adviser’s Young Persons’ Money Index, 67% of young people now regularly worry about their personal finances, due to the economic uncertainty created by the Covid-19 pandemic.
Similarly, 59% of respondents to the survey said the pandemic had made them more anxious about money in general.
Young people are facing a tough time economically; house prices have never been higher, while a recovering economy means jobs and income remain somewhat unstable.
As a result, it’s no surprise that many are turning to social media platforms to bridge the gap between these anxious unknowns and financial information. Unfortunately, there are no guarantees that the advice they’ll find will be useful to them, or even accurate.
Helping your children and grandchildren to find quality information
There are plenty of things you can do to help your children and grandchildren if you think they’re taking poor advice from social media platforms.
Speak to them about money
Ideally, the best place to start with money and young people is while they’re still children.
According to a survey from the Money Advice Service, money habits can be set from as early as age 7.
Try to help instil a positive attitude towards spending and saving from as early an age as possible, as this can really make a difference to how they view money in their adult lives.
Don’t worry if you haven’t actively sought to do this; there’s still time to have these conversations once they’re older. Your child or grandchild will likely have passively picked up your good attitudes towards money throughout their lives, too.
Warn them about social media
Social media is still a relatively new phenomenon. However, one of the best and most understood things about it now is that not everything on there is true.
Make sure your children and grandchildren know that not everything they see or read on social media will be accurate. Some of it will be mistaken, while other parts will be deliberately misleading.
Encourage them to be cautious with the information they find and teach them to take it with a pinch of salt.
Answer their questions
When your children or grandchildren ask you questions about money and investments, the best thing you can do is answer them honestly.
You may have tried to actively teach them with little success, so if they come directly to you then take this opportunity to tell them what you’ve learned through your experiences.
Introduce them to your financial adviser
If you have a relationship with a financial adviser, you could consider taking older children or grandchildren with you to your meetings.
It’s vital to know what it means to be a regulated financial adviser or planner, backed by the FCA. That’s why bringing your younger family members along can help them see the value of working with a professional for themselves.
Speak to us
If you’d like to find quality financial advice that you can trust, please speak to us at Britannic Place.
Email [email protected] or call 01905 419890 to find out more about how we could help you.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.