Gen Z Are Second Guessing Taking Consumer Advice From Social Media
With social media platforms becoming the go-to source for news, reviews and even mental health, it’s not surprising that young Americans have overwhelmingly turned to TikTok and Instagram to get advice about finances at a time of economic uncertainty. However, in a new consumer report from Credit Karma, survey research finds that these young consumers are learning that taking financial advice from influencers is not as benign as being recommended a poorly constructed dress.
According to data from Credit Karma, 43 percent of Americans actively seek financial advice and information online or through social media platforms — increasing to 77 percent of Gen Z and 61 percent of Millennials. For Gen Z, the top social platforms sought out for financial advice ranked as YouTube (71 percent), Instagram (50 percent), TikTok (49 percent), X (36 percent), Facebook (31 percent) and Snapchat (30 percent), followed by Reddit, banking or financial institution blogs, podcasts, news publications, fintech companies and threads (11 to 25 percent).
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Topics that Gen Z was looking to learn more about were ranked with budgeting leading the way (42 percent) followed by taxes (34 percent), credit card debt (29 percent), investing in the stock market (28 percent), wealth building (28 percent), opening a credit card/bank account (28 percent) and building/improving credit (27 percent).
Credit Karma’s survey also found that many are putting what they learn to action. Sixty percent of Gen Z and 54 percent of Millennials said they “have acted on financial advice they received online or on social media.” Men were found to be more likely to act on financial advice at 48 percent compared to 29 percent of women.
For many, learning about their finances online has been positive with 67 percent of Gen Z and 60 percent of Millennials claiming that they have improved their financial situations.
And while in the past these young consumers have been applauded for educating themselves early to gain good financial health, seeking information this way has gotten many into trouble. In Credit Karma’s report, 37 percent of Gen Z and 25 percent of Millennials said that they have gotten into trouble (i.e. IRS audit) after taking financial advice from social media or other online sources.
A quarter of Gen Z and nearly a quarter of Millennials also reported that they have “been scammed by a bad actor portraying to offer financial advice or guidance on social media/online.”
“While social media platforms, and the internet at large, offer easy access to a ton of useful information people can adopt in their day-to-day lives, consumers should always do their research and verify the information they find online before taking action, especially when it comes to their finances,” said Courtney Alev, consumer financial advocate at Credit Karma.
Importantly, of those survey respondents who report improved financial advice received online or on social media a majority (72 percent of Gen Z and 74 percent of Millennials) say that they “research and validate financial advice they receive on social media or online before taking any action.”
Like many other topics with a range of information on social media, Alev also said that “it’s also important to remember how personal ‘personal finance’ is. No two people have the exact same financial profile or situation, so seeking out generic, one-size-fits-all financial advice online often isn’t going to be all that useful, generally speaking.”
Credit Karma’s survey revealed that 45 percent of respondents agreed with this sentiment admitting that online financial advice is typically too generic or doesn’t apply to their unique financial situations. “It’s important for consumers to keep that top of mind when consuming financial content online,” Alev said.
Notably, while social media advice will likely prevail, Credit Karma’s research team found that when it comes to finances there remains a certain amount of hesitation. According to the company’s findings, many still prioritize their inner circles and financial institutions as their most trusted sources.
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