Social media is full of “experts” on every topic under the sun, including personal finance. In short videos or posts, influencers often claim to be able to tell you the single personal finance tip that made them a ton of money, eradicated their debt, or allowed them to retire early in style (Feel free to insert your biggest financial dreams here). These posts often come from the person’s own experiences with investing in real estate or cryptocurrencies or other passive income streams, and if you are as savvy as them, you can achieve this dream too! Posts such as this have led many friends and clients to ask me financial questions that start with “I saw on TikTok” and end with “Do you think that is a good idea?”

This brings me to my biggest gripe with personal finance tips from social media. Personal finance tips on social media lack nuance. While I think there is value in listening to other people’s financial journeys, what worked for them may not necessarily be a good option for you. Also, these posts typically lack background information on the person giving the advice, their motives for providing the advice, and their financial lives beyond the information presented in the post. Finally, whether the presenter is intentionally misleading or simply misinformed, these tips may not be factual.

So how do you know which social media finance tips are helpful and which you should ignore?

I suggest asking yourself a few questions.

First, what do I know about the person giving the tip? Are they trying to sell something? Are they a professional in the finance industry, or is this just based on their personal experience? If this tip is based on their personal experience, do you know if their financial situation is similar to yours? For example, suppose you are looking at an investment tip from a millionaire. A millionaire may be able to take on significantly more risk in their investment portfolio than someone just getting started with their financial life. So, if they lose $2,000 in a bad investment, it may just be an annoyance, whereas if you invest your emergency fund, it may take a very long time to rebuild it and leave you with even more risk in the meantime. People sharing personal finance tips based on their experience have no way of knowing what makes their advice appropriate or inappropriate for someone else; they simply present what worked for them. I also must say, if anyone is suggesting they have a risk-free investment opportunity with no chances of losing money, whether a professional or not, I cannot implore you enough to ignore it!

Second, can this tip be corroborated by other reputable sources of financial information like Investopedia, the Wall Street Journal, the IRS website, or a financial professional in your life? New strategies do emerge in the finance industry, but investing secrets do not stay secrets for long. If the general public knows about any investment strategy, it will likely be discussed elsewhere.   

Third, does the advice align with my financial life and goals? For example, investing in a rental property could be an excellent idea. However, if you have short-term financial goals that you are working on, it is probably not a great idea to put your money in an investment that cannot be easily turned back into cash. If you are very risk-averse, investing in cryptocurrencies probably doesn’t make sense. Social media personal finance posts often play on the fear of missing out. They seem to suggest that there is only one way to build financial well-being, and if you can’t currently use the strategy presented, you’re being left behind. I implore you to ignore that! Focus on building your financial well-being in ways that make sense for your financial life, and if you need help determining what path that is, seek out a professional or at least make sure that the social media tips you plan to use suit the path you are on, not someone else’s.