Too good to be true: The impact of social media on financial decisions
The COVID-19 pandemic hit the economy hard. Jobs were lost, and a lot of people were heavily affected and left in precarious financial positions. The stress resulted in many, looking for financial direction in an environment full of uncertainty.
But talking about money? Well, that’s hard for most. Money has always been a taboo subject, seemingly it’s the source of deep emotions, conflicts, and anxiety. And that may be why people have increasingly turned to social media to have these conversations.
It’s a space where you can remain anonymous, share your thoughts, with information seemingly at your fingertips. Providing an opportunity to partake in conversations that may not have happened otherwise.
Social Media Platforms
Having these discussions is a good thing and healthy, transparent financial conversations should be encouraged. However, when the exchange becomes unregulated financial advice; things quickly become a problem.
Social media revolutionised the way consumers connect and interact. Instagram has money coaches, YouTube has financial mentors, TikTok is inundated with financial influencers, personal finance-themed Facebook groups are on the rise and platforms like Twitter are offering quick-fire financial insights.
Creators are using society's obsession with social media to answer financial questions online such as “How do I create a financial portfolio?”, “What's the best stock to invest in” or “How do I save?” to build their online presence.
We are at the mercy of social media’s algorithm, based on relevancy and it very well may be showing a barrage of financial quick fixes and success stories. It can then be tempting to throw your hard-earned money into the latest stock or money-making scheme to achieve financial success or stability like these people have.
Sounds too good to be true?
Well, it may very well be. And before you shake your head; remember the financial mindset industry is worth millions.
Be careful who you trust
It’s hard to know who is giving out genuine advice and is qualified to do so. In some cases, the social media finance influencer has tens or even hundreds of thousands of followers online – they seem legitimate right? Well, they could be getting paid to promote a particular piece of financial content or have no financial qualifications at all or be a scam artist.
This is not to say that there aren't any genuine and qualified financial experts on these platforms. There most definitely are, that’s why it's essential you understand and are aware of who you are interacting with.
Always fact check and consult experts for advice. You need to make sure you are making solid financial choices for your circumstances and taking that extra step may help you make an informed decision that could save you a lot of heartache in the future.
The most credible resources are often straight from the Australian federal financial regulators, their associated watchdog agencies, and qualified financial advisors. Remember not all personal finance sources out there are created equally!
We here at Money Girl encourage you to educate yourself financially!
Here are some things to remember:
- If it sounds too good to be true, it may very well be.
- Always think twice before handing over your personal details or dollars. Scams and identity theft are very real.
- Understand your risk appetite. And remember that risk and return often go hand-in-hand.
- Always cross-check information, legitimacy, and credentials with credible sources.
- Be on the lookout for #Ads
- There is no such thing as a foolproof investment, do your own research and understand the financial data.
- Where possible consult a financial professional, when making financial decisions.
* The information provided in this article is general information only and does not take into account your objectives, financial situation or needs. Before making a financial decision, please assess the appropriateness of the information to your individual circumstances and consider seeking professional advice.