The benefits and risks of getting finance tips on social media [Video] #UKFinance

People rely on social media to help with all sorts of problems, from fixing the dishwasher to reverse parking and pensions. In fact, of all the places to get free tips on our finances, it’s overwhelmingly the most popular option for people aged 18-34.

The financial topic that people were most likely to turn to social media for was choosing what to spend their money on, followed by budgeting — with more than one in four younger people and over one in 10 of all ages looking for inspiration and tips, according to a Hargreaves Lansdown survey with Opinium in September.

When it came to investment, among younger people it was the go-to place for guidance. When all age groups were included, it was pipped by the websites of financial companies, but social media remained key.

Read more: Should you take financial advice from social media influencers?

People were very slightly less prepared to use social media for the things they weren’t so keen to share, like money worries or debts. They were more inclined to turn to charities set up to offer help, or to their parents. However, among those aged 18-34, social media still beat them both.

The benefits

Different social media platforms proved more common depending on the help people were after. For tips on spending, younger people turned to TikTok and Reddit (RDDT). For budgeting they used Instagram, and for questions around pay and debt they turned to X (formerly Twitter).

It’s easy to see why. We like to learn from the experiences of other people, especially when they’re approachable and interesting. It’s especially tempting when they seem to offer solutions that nobody else has found.

The risks

However, this approach doesn’t always work. The people we choose may not know what’s right for us, or they may not have as much knowledge as we think. They may be making faulty decisions in their own life, and passing it on as expertise. It means that whoever we turn to, we need to take care.

The first step is to consider how much they might know on the topic. On social media there are plenty of people who might have given something a go for a couple of months and consider themselves experts.

There’s also plenty of content from people who are famous for other reasons, dipping their toe in money matters.

Read more: Should you ever take career advice from TikTok influencers?

It also pays to bear in mind that being good at making content and having high follower numbers is very different from being a financial whizz. You need to ask yourself what qualifications or experience they have to back their opinion.

You also need to weigh up what they’re actually suggesting. It can feel like a social media influencer, operating outside the traditional financial services industry, has uncovered a hack that breaks all the rules of finances to give you a head start. They may, for example, say they’ve found a way of making huge returns without taking a big risk.

However, it’s far more likely there’s something else going on. They may have misunderstood something or are deliberately misleading you. They may also be talking up the benefits of an asset they already hold in an effort to ramp up the price. The same basic rules apply to us all — higher potential rewards always come with a higher risk of loss.

There’s nothing wrong with using social media, but it’s key to consider it as part of the research process — rather than the beginning and end of it.

If you see something recommended, you can explore it in more detail and decide whether it’s right for you. Your influencer should provide a gentle nudge, rather than strong-arming you into something you don’t understand.

Sarah Coles is a personal finance analyst at Hargreaves Lansdown and co-presents Switch Your Money On podcast.

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