Alicia*, an art student in her late teens, started making money through her blog late last year. The only problem? She didn’t know what to do with it.
She is not alone. A growing number of teens and young adults have started making money online. That’s where TikTok, the free-to-access micro-video-sharing platform, came in.
Some started learning about their finances on TikTok accessing a highly personalized and seemingly never-ending feed. This sounds great in theory, but problems arise when they don’t know how to spend, save or invest that money properly.
“Should I use it all for college expenses? Should I invest a part of it? If so, where? Were the few hundred dollars I earned taxable? My school never formally taught us about taxes, investments, or budgeting, so I felt lost,” Alicia told YR Media.
TikTok’s personal finance community, using hashtags like #FinTok and #StockTok, has millions of users and has become an important resource for students like Alicia.
“I came across an ‘Investing 101’ style post on my feed by chance, and I realized: I have to learn how to manage my money. If schools won’t teach it, TikTok will,” she said.
Experts believe TikTok’s format may also have a role to play.
“Due to the popularity of short-form video first via YouTube, then Instagram, and now TikTok, Gen Z is habituated to consume content in small chunks, versus long ones,” said Robb Hecht, a marketing and social media professor at Baruch College. “We are in a situation where a lot of creators are making money and want to learn investing, but not from an old school financial analyst, but from someone who is keyed into the current trends, teaches fast, and gets straight to the point.”
There’s also the inherent risk factor when teaching investments to young children. They can make mistakes and lose money. Who’s responsible for that loss then? Schools and colleges don’t want to take that risk, according to Hecht.
Andrew Selepak, a social media professor at the University of Florida weighed in on the knowledge being filtered down to future generations.
“Universities and K-12 education often don’t teach necessary life skills, so students don’t learn how to do their taxes, invest or balance a checkbook,” said Selepak. “Schools have traditionally looked at these life skills as things students would naturally learn over time. But with each new generation, people are not learning these skills and not passing them on to their children.”
Like any other social media trend, “FinTok” comes with its own set of risks, according to Dr. Natalie Pennington, a communications studies professor at the University of Nevada, Las Vegas.
“When you are talking about money and investment, risk and reward go hand in hand; and if you don't have that skill set or knowledge to balance the two, you could rely on one recommendation and lose it all. If a top CPA or financial planner (with credentials!) is sharing content and advice, that might be an account worth following,” said Pennington.
*Name changed to protect privacy.