From Hashtags to Healthy Finances
More than ever, social media is an integral part of the way we communicate. Platforms such as Instagram, X, Reddit, TikTok, and Discord have become hotspots for forming online communities built around shared interests. The ability to engage in conversations, share experiences, and exchange information has made social media platforms an invaluable resource for the dissemination of information.
One of the most prolific communities that has developed in recent years is based around providing and seeking financial advice. Stock trading and investing has become more accessible and common than ever before, with a 2023 study finding that 61% of American adults own stocks, a 10% increase from a decade ago [1]. And with a young generation that is increasingly tech– and internet-savvy, the treasure trove of financial information available on the Internet is beginning to be utilized to its fullest extent. Furthermore, with the growth of professionally-oriented platforms such as LinkedIn, and an overall growth in reliance on social media for financial advice [2], current and former industry experts are able to connect with those interested in pursuing a career in finance, or even just those with questions regarding how to be more financially responsible. Information that previously was only available to those in the business is now shared with millions of people regardless of socioeconomic standing, profession, or any other classification. And importantly, the content is available in real time, which for activities such as stock and options trading, is key to any chance of success.
The crowdsourcing elements of social media are a large draw for many. Platforms such as Reddit and Discord especially are geared towards facilitating large-scale discussions and offer anyone with access to a computer or phone the ability to consult a large community for anything from generalized advice to specialized problems. There is also a large potential to create shared goals for activities such as saving or investing, which encourages people to be conscious as to how they spend their money. One of the most well-known, albeit extreme, instances of collective action as a result of online forums occurred in January of 2021, when a coordinated effort by members of a Reddit forum known as r/wallstreetbets skyrocketed the price of GameStop shares in a protest against Wall Street hedge funds who had taken a large short position against the company [3]. While most instances of collective action are nowhere near as large-scale or controversial, it does demonstrate the effectiveness of social media platforms such as Reddit in acting as an intermediary between huge numbers of people with shared interests and goals. In fact, r/wallstreetbets has only grown in recent years, and with its membership reaching well into the millions, its influence on financial markets has only grown [4]. Originally only a place to discuss high-risk trades, WallStreetBets has quickly become a haven for any investor interested in rebelling against standard investment practices and establishing the power of the general public to influence markets on the same level as large firms and corporations. Other, more tame, subreddits such as r/personalfinance, with over 20 million members, focus on fundamental topics such as budgeting, saving, credit cards, and the like. Regardless of where your specific interests lie, there is almost guaranteed to be a community for you to join.
Another of the key advantages of social media platforms is easy access to both long and short-form content to consume. With platforms like YouTube and Reddit providing access to comprehensive and detailed breakdowns of financial topics, and TikTok and Instagram providing short, bite-sized pieces of advice and insights, everyone can find a source of information that suits them. The recent rise in popularity of the podcast as an entertainment and informational platform has been one of the largest increases in long-form content creation in recent years. Notable podcasts such as the Ramsey Show and Planet Money also make efforts to bring listeners into the experience by having audience members call in and seek advice, and in doing so have cultivated communities of their own that help increase financial literacy. Many podcasts use YouTube as their primary platform, due to its natural predisposition towards long-form content. As opposed to Spotify or other audio-based platforms, the YouTube comment section facilitates interaction between those giving and those seeking advice. Furthermore, community members are able to interact with each other, building upon shared interests and perspectives. All of this has been incredibly successful at positioning YouTube as the foremost platform for financial-related content. According to a 2022 study by Google, across all generations, YouTube continues to be the most popular platform for consuming financial advice [2].
The algorithmic content provision of social media sites is uniquely situated to give users the most relevant and recent information possible. For example, hashtags such as #GenZFinance or #FinTok have been used on social media platforms Instagram and TikTok to filter content relating to financial literacy to users interested in the subject [2]. The ability of users to easily filter through available content to find that which is most relevant to them is immensely helpful, with topics like how to budget paychecks, manage credit cards, operate retirement accounts, and more being popular subsections of larger communities. Behind YouTube, the two short-form sites are the most popular platforms.
Now, the use of social media in regard to finance is not all sunshine and roses. Just like with any other topic present on the internet, misinformation is abundant. However, financial misinformation and deception have far greater ramifications for those they affect than most other types. Many social media influencers, especially those with audiences primarily of teenage and young adult audiences, are aware of their ability to guide the actions of their followers, even when it comes to making financial decisions. Whether or not they are malicious actors, there is no denying that the statements that so-called “Finfluencers” make online can lead many people to spend their entire life savings on certain investments. With the rise of cryptocurrency, NFTs, and other high-risk investments, the potential for scams has increased significantly, with Gen Z being among the most susceptible to falling for them [6][7]. One of the most common scams, for example, is known as a “pump and dump.” Influencers or promoters will pitch a stock, cryptocurrency, or some other form of investment to their followers, causing it to become massively inflated in value by the influx of purchases. After the price rises, the promoter will sell all of their stock, making a huge profit. Now that the influencer has stopped generating hype for the investment, and with the market flooded with the quantity sold by the influencer, the price drops dramatically, and almost all of the money invested by fans and followers disappears. Other major scams and losses of money are simply a result of mismanagement or embezzlement of funds within companies. The cryptocurrency company FTX was a notable example, with celebrities such as Tom Brady, Shaquille O’Neal, Steph Curry, and Kevin O’Leary, among others, publicly supporting the company before its bankruptcy at the end of 2022. Data collected by the Federal Trade Commission between October 2020 and March 2021 showed a 400% increase in reported cryptocurrency scams and a $50 million increase in reported losses per quarter [8].
While this may seem a very negative assessment of the social media landscape, there are several steps that can be taken to mitigate the risk of falling victim to misinformation. Chief among them is simply being skeptical. More often than not, if you follow up on any claims with your research and think rationally about the reasoning behind investment proposals, you can discern whether or not a source is trustworthy. Verifying using other sources, and even advice from other people, is the best way to determine reliability. This is exactly where the crowdsourcing elements from earlier shine. Despite the presence of some malicious actors, most denizens of the web are widely supportive, particularly in interest-based communities where the sense of solidarity is strong [10].
Overall, it can be argued that social media has had a positive impact on financial literacy and, by extension, financial behavior. A 2022 study conducted on youth and social media in regards to financial literacy and behavior concluded that social media use has a positive correlation with financial literacy [11]. According to the study, low levels of financial literacy lead to higher susceptibility to scams, failure to act responsibly with money, lower likelihood of having sufficient retirement funds, lower likelihood of having emergency savings, and a number of other negative financial outcomes. Furthermore, a 2020 study in Indonesia associated high levels of financial literacy with a significant reduction in excessive consumptive expenditure. Through exposure to a broad range of financial topics, as well as access to ongoing discourse about finance, students who utilized social media for the purpose of educating themselves on financial topics saw general improvements to their financial literacy in comparison to others who did not have the same exposure[12]. The effects of social media on financial knowledge, attitude, and behavior are all positive, as the depth and breadth of information available through social media tend to have a positive correlation with all three variables [13].
On the whole, social media’s ease of access and general reliability have proven to be useful in developing financial literacy skills, especially in the younger generation. It will likely only become more relevant as a source of financial information, especially as costs of living continue to rise and real wage growth continues to remain essentially stagnant [14]. An increasing number of people are turning towards investment and other alternative forms of income as a means to stay afloat.
Social media platforms will only continue to grow in popularity as successive generations become more and more accustomed to living on the internet. As the generations who grew up using social media become the experts in the financial field, the wealth of information will continue to deepen, and the communities will become more and more useful to those seeking advice and knowledge about financial matters. It is important to practice caution when engaging with any form of social media that gives financial advice, as a plethora of scams are present throughout social media platforms. However, the ability to find a community with which you can work and grow has many benefits. Ultimately, using social media as a tool for enhancing your financial literacy has an incredible potential for expanding your knowledge and understanding of the many complexities of navigating modern financial markets.
References
[12] Arifa Miftahul Jannah, et al. Journal of Economic Education, vol. 10, no. 2, 2021, pp. 85–93.
[2] Baird, Sam. “Social Media for Personal Finances: A New Trend for Millennials and Gen Z.” Federal Reserve Bank of Kansas City, 11 Oct. 2023, www.kansascityfed.org/research/payments-system-research-briefings/social-media-for-personal-finances-a-new-trend-for-millennials-and-gen-z/.
[7]Blake, Suzanne. “How Social Media Is Threatening Gen Z’s Finances.” Newsweek, 29 Feb. 2024, www.newsweek.com/gen-z-tiktok-influencers-threaten-finances-investments-1874741.
[3] Davies, Rob. “GameStop: How Reddit Amateurs Took Aim at Wall Street’s Short-Sellers.” The Guardian, 28 Jan. 2021, www.theguardian.com/business/2021/jan/28/gamestop-how-reddits-amateurs-tripped-wall-streets-short-sellers.
[14] DeSilver, Drew. “For Most U.S. Workers, Real Wages Have Barely Budged in Decades.” Pew Research Center, Pew Research Center, 7 Aug. 2018, www.pewresearch.org/short-reads/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/.
[10] Hy, Khe. “Reddit Has Become the Gospel of Personal Finance.” Quartz, 3 Mar. 2020, qz.com/1707479/reddit-has-become-a-guide-to-personal-finance.
[4] Johnson, Jeffrey Neal. “Wallstreetbets: How a Reddit Forum Shook up Stock Market Dynamics.” Entrepreneur, 12 Dec. 2024, www.entrepreneur.com/finance/wallstreetbets-how-a-reddit-forum-shook-up-stock-market/484269#:~:text=WallStreetBets%20was%20created%20in%202012,not%20just%20tolerated%20but%20celebrated.
[11] Khan, Mohammad Shahfaraz, and Zuhaib Ahmad. “The Effects of Financial Literacy and Social Media on Financial Behaviour.” Mixed Methods Perspectives on Communication and Social Media Research, 10 June 2022, pp. 144–164, https://doi.org/10.4324/9781003265887-12.
[6] Kwai, Isabella. “Financial Advice on Social Media Is Growing. And Risky.” The New York Times, 25 Jan. 2025, www.nytimes.com/2025/01/25/business/financial-advice-social-media-influencers.html.
[8] Nguyen, Stephanie T., and Emma Fletcher. “Cryptocurrency Buzz Drives Record Investment Scam Losses.” Federal Trade Commission, 17 May 2021, www.ftc.gov/news-events/data-visualizations/data-spotlight/2021/05/cryptocurrency-buzz-drives-record-investment-scam-losses.
[9] O’Donnell, Kenneth Fang and Kelly. “Verify, Then Trust: Preventing Online Investment Scams.” Investment Company Institute, 21 Nov. 2024, www.ici.org/viewpoints/24-preventing-online-scams#:~:text=Investment%20fraud%20is%20on%20the,perpetrate%20and%20harder%20to%20spot.
[5] Trivette, Hannah. “Council Post: A Guide to Social Media Algorithms and SEO.” Forbes, 13 Aug. 2024, www.forbes.com/councils/forbesagencycouncil/2022/10/14/a-guide-to-social-media-algorithms-and-seo/.
[1] Various Authors. “What Percentage of Americans Own Stock?” Gallup.Com, 21 Feb. 2025, news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx.
[13] Yanto, Heri, et al. “The Roles of Peers and Social Media in Building Financial Literacy among the Millennial Generation: A Case of Indonesian Economics and Business Students.” Cogent Social Sciences, vol. 7, no. 1, 1 Jan. 2021, https://doi.org/10.1080/23311886.2021.1947579 .