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Financial Advice on TikTok: What You Need to Know

Discussing personal finance on social media is not a new phenomenon, but financial advice on TikTok is spreading rapidly. As you scroll through the app, you’ll encounter a variety of content, from everyday budgeting and savings tips to aspirational “what I spend in a day” videos.

While many individuals use TikTok to share their experiences and valuable guidance, following some advice on the platform can be risky. Here are some ways to determine whether a TikTok influencer is providing sound advice or leading you astray.

1. Google It

If someone recommends a solid financial strategy, you will likely find information about it elsewhere online. If a TikToker claims that financial information is a little-known secret, it might be a secret for a reason—perhaps it’s impractical or even illegal.

For instance, registering a business does not give you the freedom to write off personal bills as business expenses, and doing so could have tax repercussions. Yet, some TikTokers suggest this for a tax break. Similarly, investing in a brokerage account and selling assets without paying taxes on gains is another big no-no, but some TikTokers offer tips on how to do it.

When in doubt about a strategy, Google it. Here are some reliable resources for information on tax rules, financial products, and more:

• IRS.gov: Find information on tax forms, tax rules, and how to pay your tax bill.
• ConsumerFinance.gov: Access a vast database of consumer financial information, from mortgage programs to student loan debt repayment options.
• Investor.gov: Learn about investing basics, how the stock market works, and different investment products.
• FTC.gov: Explore guides on debt vehicles and how to avoid and report scams.

2. Check Credentials

While credentials are not required to offer general tips on saving money, repaying debt, negotiating a raise, or buying a home, advice on more complex topics like stock picks should be backed by experience.

Anyone claiming to be an expert in a specific field should display their credentials prominently in their bio. This is especially true in areas such as real estate, tax planning, and investing, where a mistake could cost you money or get you in trouble with the IRS.

Check profiles and search names to distinguish real experts from pretenders. Financial experts often include certified financial planners, chartered financial analysts, certified public accountants, and enrolled agents.

3. Look Out for Get-Rich-Quick Advice

Be wary of anyone promising to teach you how to amass thousands or millions of dollars overnight in a short video. Strategies like day trading can put you at risk of losing significant sums of money.

It’s natural to feel curious or experience FOMO (fear of missing out) when someone online appears to make big bucks. However, there’s no way to know what’s really happening behind the scenes. Creating a budget, building emergency savings, paying down debt, and investing in retirement plans can help grow your nest egg over time. If you want to confirm you’re on the right financial track, consider speaking with a financial planner—one you find off TikTok.

4. Figure Out the Motive

Using social media to discuss money isn’t always negative—many legitimate public figures, coaches, and advisors use it to teach financial literacy concepts. These professionals generally have a passion for helping communities improve their financial well-being.

Others giving money advice might be jumping on a trend for a payday. Your job is to determine their motive, which could be selling a product or gaining a following by sharing financial hot takes. Understanding their motive can help you decide if the advice is legitimate or shady.

5. Beware of Guarantees

When it comes to money, few things are guaranteed. For example, past investment performance doesn’t guarantee future performance. Similarly, buying real estate and flipping it isn’t guaranteed to turn a profit—despite it looking easy from afar.

If a TikToker guarantees that a strategy will work, proceed with caution, even if that TikToker has been successful using it. Many variables must align for a financial move to be fruitful, and conducting your own research can help you decide if it makes sense for you.

The Bottom Line

Sharing money advice on TikTok is a hot trend, but not all advice is good advice. While those giving out bad advice might not do so intentionally, it’s crucial to vet the information. Cross-checking recommendations against other sources, reviewing credentials, or consulting with a financial advisor can help you identify advice worth following.

For any mortgage-related needs, feel free to call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with confidence.

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