It is no secret we’re all consumers of our social media algorithm. When a well-known brand tells us to buy their next new gadget, we buy it. When a dance trend hits the media, we quickly learn it. When world news strikes the internet, we engage and respond. As it seems, we always follow what the media targets us, with little time to pause and question what could be at stake.
The same concept applies to one of the most important areas of modern life: our finances. At a time when massive layoffs are threatening pensions, benefits, and retirement security, conversations around “financial literacy” soon spark the internet. Financial influencers immediately inform about how to budget intelligently, emphasizing key factors such as savings, insurance, side gigs, crypto, etc. Yet, this significant subject aside, what is the real downside to listening to this persuasive population?
The truth of it is, media literacy is affecting the financial industry, and the need to turn to social media influencers is what can likely lead to a financial crisis. And as one personal finance and retirement company puts it, people are not listening to the important topics at hand when it comes to financing effectively.
“We’re stuck in a loop talking about budgeting, credit scores and saving on coffee, while ignoring the other 80% of the financial picture,” says Michael Scarpati, CEO of RetireUS. His company is focused on a seamless approach to providing employers, especially government workers, easy access to financial professionals. Their goal being to offer a fiduciary expert who advises on all things employer benefits, investment, cash flow, savings, and more.
“People need to understand taxes, insurance, asset management, income gaps, estate planning and how their benefits actually work especially if they’re all of the sudden thrown into retirement. But because of what’s trending online, they’re not even thinking about those things,” Scarpati added.
Ultimately, Scarpati believes media literacy must now become part of the financial literacy talk, especially since more folks are highly depending on social media for financial advice.
“Most of the influencers giving financial advice online aren’t licensed or registered. If they were, they wouldn’t be posting half of what they do due to strict regulations,” he explains. “That’s a huge red flag. The financial advice dominating your feed is likely coming from people who have no professional obligation to protect your best interest.”
Today, financial influencers are growing at a speedy trajectory. For instance, you’ve likely heard of Dave Ramsey or Caleb Hammer, both of whom have dominated the financial landscape on TikTok and Instagram. Ramsey, with over nine million followers on his socials combined, and Caleb Hammer, culminating over two million followers on his platforms, have been known to move society forward in regard to financing. Whether about student debt, spending habits, taxes, or any other element of the field, people are surely conforming to their financial content.
Likewise, in 2024, financial influencers, also known as “finfluencers,” saw popularity amongst Gen Z’ers. A report by the CFA Institute found that this generation is more likely to engage with finfluencers because of a preference to learn information online and a lack of access to real financial experts. Last year, Americans turned to TikTok for topics about budgeting (25%), investing (24%), credit cards and credit scores (33%), according to an article from CNBC.
Overall, the problem is that not all financial advice is bad, but not all of it is equal. Just like you wouldn’t take medical advice from someone without a license, you shouldn’t make life-altering money decisions based on a viral video. And in an era where financing is changing more than ever, your time to re-evaluate your sources is now.
Even so, it is no longer enough to “talk money”—people need to be equipped to make smart financial decisions with complete, regulated, and relevant information from an expert in the real world.