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In an environment where information is propagated at lightning speed, the young people of Generation Z are finding a growing interest in exploring notions of personal finance and financial education via social networks. This trend has gained momentum, with recent studies showing that over 75% of young Americans turn to the Internet for financial advice. The emergence of such a phenomenon raises crucial questions about the quality of the information available, as well as the risks associated with advice that is often unverified and sometimes misleading.
From this information-seeking dynamic come unparalleled opportunities for young people, who can now access investment strategies, budget management advice and wealth creation methods directly via platforms such as YouTube, Instagram or TikTok. However, this quest for knowledge is also overshadowed by the threat of dubious information and advice based on personal experience rather than sound financial principles.
Every day, we are witnessing growth exponential growth of finance-related content on various social platforms. Young influencers are monetizing their know-how by sharing financial advice, often without any formal training in economics or finance. YouTube tops the list of information sources for 71% of this generation, followed by Instagram with 50% and TikTok at 49%. This trend highlights a cultural shift where access to information is taking precedence over traditional academic training.
Financial topics of interest to young people include budgeting and stock market investing, yet this democratization of information is not without risks. Easy access to countless tips and tricks can lead some young people to make ill-considered financial decisions, the consequences of which can be devastating. For example, while 67% of Gen Z admit to having improved their financial situation thanks to social media, 37% admit to having suffered financial losses as a result of advice they followed online.
The platforms of choice
Younger generations are turning to atypical platforms for information about the personal finance. TikTok’s short, often humorous visual summaries can appeal to an audience eager to consume information quickly. Longer videos on YouTube, on the other hand, allow more complex concepts to be explored in greater depth. However, this evolution raises ethical questions: how can we assess the credibility of sources?
Content on YouTube, for example, although rated by the community, can be biased by the number of subscribers or the quality of production. In this respect, Instagram offers a visually appealing overview but remains limited on the informative aspect of the advice given. So it’s up to each user to cross-reference information and critically analyze the advice offered to them.
We also need to consider the impact that this consumption of financial information has on young people’s buying behavior. Influencers may portray an attractive image of investing and budgeting, but this can encourage impulsive choices, particularly among those seeking to emulate an ostentatious lifestyle.
The underlying dangers of online advice
While it’s undeniable that young people are getting practical and useful advice via social networks, it’s essential to qualify these benefits with an informed approach. Numerous testimonials reveal that even among those who have improved their financial situation, many have also encountered financial difficulties following investments based on viral recommendations. Having access to information is a step forward, but knowing how to contextualize and evaluate it requires a prudence that is often lacking among the under-30s.
Even more worrying, a quarter of the young people surveyed said they had been victims of financial fraud. These scams, disguised as expert advice, underline the importance of being vigilant before following recommendations. A significant proportion of the population (37% of Gen Z) face financial challenges after applying suggestions found on social networks.
It therefore becomes preferable to encourage those navigating the world of finance to become autonomous learners. This means thorough research and discussions with experts before rushing into the investment opportunities that lie ahead.
The role of financial institutions
Faced with the growing power of social networks, financial institutions have a duty to react. The trust they have steadily lost in the face of the explosion in fintech and online financial advice could be restored through appropriate and accessible educational resources. Young consumers need to understand that it is essential to seek qualified financial advice when making decisions about investing their money.
Institutions can take action by creating educational programs that explain the basics of financial management, the importance of a balanced budget and how to avoid common investment pitfalls. Establishing such programs with attractive content could be a solution to the ubiquitous misinformation on social networks.
On the other hand, while Generation Z wants more personalization and direct access to advice, the introduction of innovative digital tools could help broaden young people’s financial horizons, while offering them solid information.
Towards a more integrated financial education
To prepare young people to navigate serenely in an ever-changing financial world, the need to integrate financial education into school curricula is becoming imperative. It complements the need to emphasize the importance of financial literacy from an early age, to forge a generation capable of making informed decisions about their personal finances.
This requires practical instruction in account management, investing and understanding credit. Training young people in less risky environments than those offered by social platforms would enable them to acquire reliable tools for dealing with future financial realities. By offering a well-structured education, possibly with partnerships with financial institutions, young people can build a solid foundation that they can later extend with their own online research.
This educational framework could also establish a foundation of trust between new generations and traditional financial institutions, enabling a collaboration that is beneficial to society’s financial future.
Individual responsibility in learning
Ultimately, the responsibility for learning and understanding financial issues lies with each individual. On the Internet, alongside a profusion of useful, seductive and sometimes misleading information, it’s up to Generation Z to develop a critical sense. This means going beyond simple videos and blog posts, seeking out reliable sources and taking the time to verify the advice given online.
Adopting a cautious approach while integrating the possibilities offered by digital platforms is essential to avoid errors of judgment. Calling on experts when necessary should also be part of good practice. So, even if social networks have restarted the dialogue around money, it’s vital that young people adopt a posture of continuous learning and regular updating of their personal finance knowledge.
A proactive approach to seeking comprehensive financial education is crucial in a world where information circulates unfiltered.
Conclusion: Embracing an enlightened financial future
Generation Z is at a crossroads. While they have unprecedented access to financial information thanks to social networks, they have a huge responsibility to navigate these waters with discernment. The opportunities for learning and self-improvement are endless, but must be balanced with caution. Creating an open dialogue around financial management, both within families and institutions, is essential to ensure that financial knowledge is transformed into power.
