Social media has a powerful influence on people’s financial decisions and behaviors, often leading to lifestyle inflation. James Curry, Senior Vice President, Director of Wealth Management at Greenleaf Trust, explains that social media exposes us to the luxurious lives of others, creating an unrealistic perception of wealth. As individuals strive to match the extravagant experiences seen online, they may fall into debt traps by overspending on things like high-interest credit cards and loans. To combat this, Curry recommends setting clear financial goals to balance short-term enjoyment with long-term financial stability.
In addition to lifestyle inflation, social media also presents a plethora of financial content and advice online. A recent survey revealed that 79% of Americans in the millennial or Gen Z age groups have sought financial advice from social media. While there are reputable ‘finfluencers’ providing valuable information, consumers should be cautious of following advice from sources with hidden agendas, such as those selling financial products, promoting ‘get rich quick’ schemes, or guaranteeing returns. It is essential to thoroughly research the credibility and motivations of these sources before making any financial decisions.
Despite the risks associated with social media, there are also positive impacts on financial literacy and awareness. Financial influencers are destigmatizing conversations about money and making finance more relatable, especially to younger generations. This shift marks a significant change from previous generations when discussing finances was considered taboo. The survey also indicated that a majority of respondents believe that financial content on social media has made it easier to talk about money and has empowered them to seek out financial advice.
While there are certainly challenges and risks related to financial advice on social media, it is essential to recognize the role that platforms can play in promoting financial education and awareness. By being discerning about the sources of financial information and taking steps to establish clear financial goals, individuals can navigate the complexities of social media and make informed decisions about their financial well-being. Overall, social media has the potential to be a valuable tool for financial empowerment and education when used wisely and critically.
