Personal finance the TikTok way

The video sharing app TikTok may be best known for viral dance trends, but it also has a money-minded side. Users scroll through videos featuring stacks of cash, the latest cryptocurrency fads, stock buying tips, and step-by-step guides to cutting spending or starting a retirement fund. Called finance TikTok, or “FinTok”, it offers a blend of advice from mundane to risky.

Students are listening, and in some cases, falling for scams. In a bid to weed out bad advice on the app, TikTok recently banned promotions of a variety of financial services. But some creators say that will just drive away those who give good advice.

Last year, 21 states required high school students to take a course in personal finance, according to the Council for Economic Education. But most teens aren’t confident in their money knowledge, and many turn to social media. According to Pew Research Center, about half of U.S. adults under 29 use TikTok, where hashtags like #personalfinance and #stocktok have racked up billions of views. Some videos target college students with advice on education tax breaks and paying off student loans. Others encourage youth to ask parents to help them get a credit card or buy stocks. In a January MagnifyMoney survey, 41 percent of 18 to 24-year-olds reported getting investing information from TikTok in the last month, putting the app behind only YouTube as a source of money advice.

Young people are especially susceptible to scams. The Better Business Bureau reported a nearly 25 percent jump in scam reports from 2019 to 2020. Scams related to cryptocurrency and investment, both popular topics on TikTok, were among the top 10 most common. Some 57 percent of students who reported a scam said they had lost money, compared to 46 percent of non-students, according to the Better Business Bureau.

In response, TikTok added a slew of financial products to its list of banned sponsored content. Influencers can no longer post paid promotions of specific loans and credit cards, trading platforms, investment services, and other products. The companies can still advertise on the app.

Some think the ban is misguided. Nick Meyer, a certified financial planner who posts advice on TikTok, argued removing opportunities for creators to make money will drive them off the app, including those who offer good information. Financial adviser Brian Preston suggested TikTok instead ensure creators disclose any money they make from viewers, including from affiliate links, which pay creators if viewers follow their links to buy products.

Some school finance teachers use the app to reach students. Brian Page, a personal finance teacher, posts TikTok videos with topics like tipping at restaurants and calculating compound interest. David Poku, a finance student in the United Kingdom, spoofed the stacks of money shown off in other TikTok videos to explain the pitfalls of affiliate links. Poku told Guardian Money he became interested in financial literacy because of the lack of education on it in school, and now pulls information from his college courses to make videos.

Preston said young investors watching TikTok videos should ask themselves how the creators get paid and whether they’re speaking from personal experience or an education in finance. “I want you to use this modern tool well,” he said. “But you have to figure out how to filter, to find the educators versus the grifters.”