Millennials and Gen Zers are facing an economic situation that grows gradually bleak.
With 57 percent of US adults lacking funds to cover a $1,000 emergency expense and 60 percent living paycheck to paycheck, it’s clear that this economy is not kind to young people wanting to take control of their finances.
Add in low wage growth, spiraling interest rates, and rapidly rising rent, and it’s only growing harder to thrive as a young person in America.
It's no secret that social media has become a significant part of our lives, and in such difficult times, it's natural to turn to social media for advice.
Social Media-Powered Learning
Millennials and Gen Zers have shown interest in taking control of their financial lives by using their spare time to become financially literate in creative and interesting ways.
Given smartphones and the internet age, the entire world is literally at our fingertips.
Gen Z is the first generation born with a smartphone in hand, which explains why this generation relies on technology to stay educated. They use YouTube and other videos as their preferred learning methods.
Millennials, the generation closest to Gen Z, have similar habits, with Google searches being their top method for getting financial advice. This second youngest population spends about 6.6 hours on their smartphones per day.
Unlike Millennials, Gen Z also uses TikTok at a huge rate to get more financial information. According to a 2021 study conducted by Qualtrics on behalf of Credit Karma, more than half (52 percent) of Gen Z respondents of Gen Zers have sourced financial advice from TikTok, admitting they’re likely to turn to the platform to get advice on budgeting tips as well as short- and long-term savings.
However, advice and education that can be found on social media platforms don’t always come from a credible source.
Adapting to the Changing Needs of a New Generation
Many brands are working on capturing the attention of Millennials and Gen Z.
In order to capture this burgeoning market, financial institutions have managed to adapt their services to the new needs of these generations, especially by incorporating simpler interfaces and education into their existing product and offerings.
The Need for Expert Advice
When it comes to getting financial advice online, the younger generations may move too fast and too much on their own.
The abundance of information available online can lead to a false sense of security. Because it’s for a mass audience, the advice is rather generic. Also, most social media money gurus lack the qualifications to provide personalized advice.
It might sound cliché, but any solution to the personal finance problem should be personal.
“You can Google a financial plan, but the search engine can’t make you a personal financial plan,” advises Darren Nomberg, Senior Vice President, Investments at David Lerner Associates.
Nomberg mentions, “My advice would be to slow down, figure out where you stand, and get help developing a plan for where you want to go.”
Should Young People Trust Personal Finance Advice on Social Media?
It’s perhaps surprising that Gen Z has such low confidence in their financial literacy despite how much information is available today.
Social media advice should be taken with a grain of salt. Not all advice on social media is accurate, reliable, or helpful.
This is a sign that we need a strategy that goes beyond merely putting up content on websites, creating apps, or running hour-long awareness sessions that hardly scratch the surface of this transformative skill.
The strategy should involve delivering a school program that covers all the basics of personal finance. It has been proven that in-person instruction is more effective in changing behavior than digital or gamified instruction, especially over the long term.
There’s a need for wide-scale collaboration among various stakeholders — schools, students, parents, financial institutions, and government bodies.
Gen Z belongs to a generation of highly inquisitive individuals with copious levels of curiosity and various avenues to satiate it. What’s lacking are proper mechanisms and informed guidance to better navigate the many streams of information thrown at them left and right.
A meaningful education in financial literacy is a great way for these generations, currently staring down their third ‘once-in-a-lifetime’ economic downturn, can take their finances into their own hands.
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