Personal finance the TikTok way

The video sharing app TikTok may be best known
for viral dance trends, but it also has a money-minded side. Users scroll
through videos featuring stacks of cash, the latest cryptocurrency fads,
stock buying tips, and step-by-step guides to cutting spending or starting a
retirement fund. Called finance TikTok, or “FinTok”, it offers a blend of
advice from mundane to risky.

Students are
listening, and in some cases, falling for scams. In a bid to weed out bad
advice on the app, TikTok recently banned promotions of a variety of financial
services. But some creators say that will just drive away those who give
good advice.

Last year, 21
states required high school students to take a course in personal finance, according to the Council for
Economic Education. But most teens aren’t confident
in their money knowledge, and many turn to social media. According to Pew Research Center,
about half of U.S. adults under 29 use TikTok, where hashtags like
#personalfinance and #stocktok have racked up billions of views. Some videos target
college students with advice on education tax breaks and paying off student
loans. Others encourage youth to ask parents to help them get a credit card or
buy stocks. In a January MagnifyMoney survey, 41 percent of 18 to
24-year-olds reported getting investing information from TikTok in the last
month, putting the app behind only YouTube as a source of money advice.

Young people
are especially susceptible to scams. The Better Business Bureau reported a nearly 25 percent
jump in scam reports from 2019 to 2020. Scams related to cryptocurrency and
investment, both popular topics on TikTok, were among the top 10 most common. Some
57 percent of students who reported a scam said they had lost money, compared
to 46 percent of non-students, according to the Better Business Bureau.

In response,
TikTok added a slew of financial products to its list of banned sponsored
content. Influencers can no longer post paid promotions of specific loans and
credit cards, trading platforms, investment services, and other products. The
companies can still advertise on the app.

Some think
the ban is misguided. Nick Meyer, a certified financial planner who posts advice
on TikTok, argued removing opportunities for creators to make money will drive
them off the app, including those who offer good information. Financial adviser
Brian Preston suggested TikTok instead ensure creators disclose any money they
make from viewers, including from affiliate links, which pay creators if
viewers follow their links to buy products.

Some school
finance teachers use the app to reach students. Brian Page, a personal finance
teacher, posts TikTok videos with topics like tipping at restaurants and calculating
compound interest. David Poku, a finance student in the United Kingdom, spoofed
the stacks of money shown off in other TikTok videos to explain the pitfalls of
affiliate links. Poku told Guardian Money he became interested in financial literacy because of the lack of
education on it in school, and now pulls information from his college courses
to make videos.

Preston said
young investors watching TikTok videos should ask themselves how the creators
get paid and whether they’re speaking from personal experience or an education
in finance. “I want you to use this modern tool well,” he said. “But you have
to figure out how to filter, to find the educators versus the grifters.”

Read More: Personal finance the TikTok way

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