In today's digital age, social media platforms like TikTok have revolutionized the way we consume content. While these platforms offer an endless supply of information and entertainment, they also have their downsides. One concern is the spread of inaccurate or misleading information, especially when it comes to money matters. While users may not be giving out false information to be malicious, their bad advice may cause viewers to make costly mistakes.
Top reasons to fact check financial advice from social media
1. Sound bites vs. financial education
Many finance tips on platforms like TikTok are presented in short, catchy sound bites. While these snippets may seem appealing and easy to understand, they often oversimplify complex financial concepts. Personal finance is not one-size-fits-all, and what works for one person may not work for another. Therefore, it's essential to dig deeper and verify the information you encounter.
- Tip: A financial coach can help you understand concepts within the context of your unique financial situation and goals. General Electric Credit Union (GECU) members can schedule an appointment with a dedicated team member for one-on-one guidance.
2. Lack of credentials
Social media influencers and content creators often share financial tips without the same level of accountability as certified financial professionals. Anyone can post financial advice online, regardless of their qualifications or expertise. This lack of regulation means misinformation can spread quickly. Always verify the credentials of a user. Just because they don’t have any doesn’t necessarily mean what they’re saying isn’t true. But it does mean you should cross-reference their advice with a credible source.
3. Misleading success stories
Social media platforms are rife with success stories, often featuring individuals who claim to have turned a small investment into a fortune. While these stories can be inspiring, they may not tell the whole truth.
It's crucial to remember financial success typically involves risk, and for every success story, there are many stories of people who lost money. Be cautious of any advice that guarantees quick and easy wealth.
4. Confirmation bias
When we encounter financial advice that aligns with our preexisting beliefs or desires, it's easy to fall victim to confirmation bias. This cognitive bias leads us to give more weight to information that confirms our existing beliefs while ignoring or dismissing contradictory information. Fact-checking helps mitigate confirmation bias by encouraging a more objective evaluation of financial advice.
5. Viral doesn’t equal true
TikTok and other social media platforms thrive on virality. Videos that go viral often gain credibility, even if the information they contain is incorrect. The more likes, shares, and comments a video receives, the more it can seem like trustworthy advice. However, popularity does not equal accuracy. Always verify the claims made in viral finance tips.
The importance of critical thinking
Critical thinking is a valuable skill when it comes to evaluating financial advice on social media. Before accepting a financial tip as gospel truth, ask yourself:
- Is the source credible? Does the person providing the advice have relevant qualifications?
- Does the advice sound too good to be true?
- Have you verified the information from multiple reliable sources?
- Does the advice consider your unique financial situation, goals, and risk tolerance?
- What potential risks or drawbacks are associated with the advice?
Whether you follow FinTok or your For You Page (FYP) is full of money matters, it’s important not to take other users’ financial advice at face value. Approach information with caution and skepticism. If you're unsure about a money decision or need personalized advice, consult one of GECU’s team members. They can provide tailored recommendations based on your specific financial circumstances. Schedule an appointment to get started.