Top Money Advice Shared by TikTok Influences: An Advisor Weighs In

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Key Takeaways

More than half of TikTok users say they turn to the app for financial planning advice.* 
65% said likes or views was the key determining factor to winning their trust while just 41% say it’s their independent fact checking. 
63% of those turning to TikTok for financial advice were looking for content about saving money. 
Users didn’t always follow through. When turning to TikTok for investing advice, users say they ended up following the advice only 30% of the time. 

With more than 78 million American users, TikTok has become a go-to source for lifehacks and advice. But financial guidance? Yep, for better or worse, more than half of TikTok users say they rely on the app for financial planning advice. Personal Capital scraped TikTok’s trending #personalfinance videos and surveyed 1,000 Americans to understand what users are searching for on TikTok and how they’re evaluating their sources. Then we ran a few strategies by a financial advisor to find out where he agrees, and when he says you should keep scrolling.

What users are getting out of FinTok

There are plenty of sources for financial advice these days, so, why TikTok? More than half of respondents said they liked the ease of access (58%) and that the content was more understandable than other sources (55%).* The fact that the advice was free (47%) was also a leading decision factor.

Although content creators posting about finance aren’t verified, 43% of respondents said they turned to the app for advice because they viewed the sources as trustworthy. But their method for determining the quality of advice is less than scientific. Two-thirds of the time users looked at the number of likes or views a video received to evaluate if the content was trustworthy, 60% of the time they based it off of the number of followers the content creator had. Only 41% said they independently fact-check the advice.

The TikTok crowd is a curious bunch as respondents said they were interested in a variety of financial topics. More than half said they were interested in saving (63%), budgeting (58%), financial planning (56%), and paying off debt (52%). There’s a notable drop off in interest for more specific investment topics – only 38% were interested in learning about investing (38%), fewer still in retirement strategies (34%) and buying a house was the least popular topic (20%).

You’ve hopefully learned by now not to believe everything you read on the internet (we’re looking at the 69% who don’t fact check!). We ran some of the most common TikTok money tips by Paul Deer, a Certified Financial Planner® with Personal Capital, to find out what TikTok influencers may be getting right (and wrong) about personal finance. 

How to Handle a Recession

To prepare for a recession, the reigning advice on TikTok is to create an emergency fund, with 65% of the top financial content creators offering this advice. You may consider updating your resume as 17% of TikTok creators suggest. And only 12% suggest increasing investments above your current strategy.

Advisor’s Take: “Every recession is different, both in severity and length, so it’s hard to predict how one might impact any individual’s situation,” says Deer. “Regardless, an emergency fund is almost always a good idea to prepare for future uncertainty. We specifically aim for a baseline of 3-6 months of your normal annual spending as a baseline. Having a nest egg in a high yield interest bearing account gives you flexibility when suprises arise, giving you time to land on your feet.”

How many credit cards you should have

FinTok is split when it comes to how many credit cards to open. More than half (57%) of content creators said to have multiple cards, while a just over a third (37%) suggested having only one.

Advisor’s Take: “In general, credit cards can be a great way to start building/improving credit history, which can translate to a better overall credit score,” Deer says. “Having multiple credit cards gives you more potential to build a positive credit history, if you can avoid carrying a balance, or missing credit card payments. A good credit score is important to qualify for loans (like a home mortgage) with the best credit scores getting the best terms, including lower interest rates, higher dollar amounts, and potentially lower fees.”

“Some things to keep in mind: You’ll want to pay the balance off every month to avoid interest charges, and it should go without saying, it’s critical to make payments on time if you’re trying to build your credit. If you do carry a balance, try to do it for as short a period as possible and try to keep it below 30% of your total credit limit. Credit cards have some extremely high interest rates, so maintaining a balance hurts your net worth, and keeping a balance of more than 30% of your total credit limit will typically hurt your credit score.”

How much to save each month

On average, TikTok financial influencers recommend saving 29% of every paycheck.

Advisors Take: Deer suggests looking at the 50/30/20 rule, where up to 50% of your income is spent on necessities such as housing, food, and transportation; 30% is put toward non-discretionary spending, which covers categories such as eating out, concert tickets and shopping; and then the final 20% is put toward savings goals and paying down debt.

“How much you need to save depends largely on your goals, and how long you have to save,” Deer says. “For example, if you start saving for retirement in your 20s, you’ll have 40 years of compounding growth on those savings to help push your nest egg along. Conversely, if you start saving for retirement in your 50s, you may only have 10 years before you need the money, meaning you’ll have to rely less on the miracle benefits of compounding by saving more of your income each year.”

How to prioritize paying off debt

Money and debt can be emotionally charged subjects for many. There are several important considerations to help you make the decision that’s right for you – and perhaps going by the blanket advice on TikTok might not be what works for your situation.

When it comes to debt, 78% of influencers agree: Pay it down as soon as possible. But if you ask a financial advisor, their advice will likely be that it depends.

Advisor Take: “If you have high-interest debt (anything above what you could reasonably achieve if you invested the assets instead of paying down the debt – say 8-9% annually), it’s likely beneficial to pay it down as soon as possible to keep the balance from growing to a level that isn’t manageable,” Deer says. “Many credit cards and personal loans have interest rates that hover around 20% – if you’re only making the minimum payment each month, not only are you not paying down the balance, but the debt will also keep growing, and compounding.

On the other hand, he says, there are scenarios where it may make more sense to direct your money toward a retirement or investment account before paying down debt – especially if you have a low-interest loan. “The stock market has an average annual return of 7% when you account for inflation, according to the Securities and Exchange Commission. This return rate might be higher than the interest rate you’re paying on your mortgage, car loan and student loan. Over the years the opportunity for gains in the market could offset and potentially exceed the cost of interest payments.”

Again, the ultimate decision is up to you. A place to start is with this debt payoff calculator, or the Debt Paydown tool in the Personal Capital dashboard.

Advice beyond FinTok

TikTok influencers offer advice for the masses. But finance is deeply personal, and what works for one TikTok viewer might not work for you. In fact, our survey found that about half the time respondents didn’t follow through with an influencer’s advice. 

If you’re looking for an individualized financial plan to achieve your unique goals, consider working with a financial advisor. They can take a look at your full financial picture and help you find strategies that work for you. 

* Methodology 
Following a scrape of a small sample of the trending videos under #personalfinance, the topics and advice given were recorded. During the analysis, the types of advice given under each topic were compared against each other. For example, among all of the videos reviewed that mentioned credit cards, 6% said you should not have any, 37% said that you should have one, and 56% said you should have multiple. Additionally, we surveyed 1,000 respondents that use TikTok for financial education. Among our respondents, 10% were baby boomers, 19% were Gen Xers, 43% were millennials, and 28% were Gen Zers. 

About Personal Capital

Personal Capital is dedicated to empowering people with what they need to be financially secure. We provide expert financial advice and tools for wealth and money management.

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