.People film themselves binge-gaming watching other videos on social media – like Gogglebox but for people with the attention span of a gnat – and hundreds of thousands of people watch in awe . I haven’t seen a reaction video to an “finfluencer” yet, but I can tell you that mine would not be broadcast. While some pros provide sound financial advice on social media, there are also plenty of offerings ranging from the ridiculous to downright damaging.
You can see why people are looking for solutions to their financial problems right now. The scale of the price hike is making people increasingly desperate, and the news that Citi expects inflation to hit 18% will have caused a lot of panic. ONS studies show that more than half of us have already done some of the obvious, sensible things to cut costs – like cutting energy use, driving less, shopping around and cutting back on non-essentials. But with price increases at this level, for millions of people, this will not be enough.
In reality, we are not going to be left alone with this. Governments around the world are taking unprecedented action to protect people from the full force of price hikes. However, at this stage, the prime minister candidates are remaining tight-lipped on the details of their plans, so we don’t know what help will be forthcoming. So it’s no surprise that people search for anything that might help.
That means there’s a market for videos on social media showing “unusual things you’ve never heard of that will save you money” and “secrets that will solve your financial problems”. And you don’t have to be on Tik Tok to see them, especially now that Facebook has started including popular videos in its feed.
In some cases, these tips are simply useless. For some reason, my social media chose to show me a video highlighting the myriad of useful ways to reuse staggered pantyhose to save money. If you ever want a tired brown nylon scrunchie that slips out of your hair and falls apart, then this contains the answer to all your problems. However, the real answer is surely to wear trousers, so you don’t risk getting your nails into £1.50 stockings before breakfast.
In others, they do not add much and involve risks that are not clearly defined. One of them is money stuffing. For many people, it’s the budget equivalent of announcing an exciting new egg-sucking technique to your grandmother, but it’s taken off. This involves withdrawing your salary on the first day and putting it in envelopes labeled with expense categories, such as groceries and savings. You can put less in envelopes where you want to shrink, easily see how much you have left, and stop when you run out. It’s not necessarily a hideous approach, but you’d be much better off with a budget and a good checking account app. This way your money is safe, rather than sitting around your house in envelopes. It can also earn interest.
In other cases, the “practical tips” are downright dangerous. There are all sorts of people touting the solution to buying a house without saving or making a million in day trading. Some of them misunderstand the risks they take, while others massively simplify things to make them seem like easy ways to make money, so they can gain followers. Others are scams designed to rip people off. Scammers know how desperate people are, so they double down on offering something that seems like the answer to people’s problems, but will make everything worse.
However, there are exceptions and some good advice. There are videos from journalists, experts, and bloggers with tons of knowledge and experience. You can search for winners and people with financial backgrounds. The likes of @AndyCleverCash, Jordancox.com, mrsmoneypenny.com, muchmorewithless.co.uk, mrmoneyjar and Skintdad offer plenty of helpful advice.
The problem is that it can be very difficult to separate the good from the bad when you’re just starting out. So it might be worth digging a bit if you find yourself drawn into one of these videos, and there are five questions to ask:
Who are they? Does their profile demonstrate knowledge, financial qualifications, skills or experience? Keep in mind that popularity doesn’t translate to integrity, so just because something has thousands of views doesn’t mean it’s sound advice.
What is the context? Use the videos as a starting point to do your own research to get the big picture. They can boast of having made a fortune with an investment technique, but what was the market doing at the time? Would a wild guess and average luck have produced a similar result?
What’s the downside? These videos don’t have much time to get into the risks, potential losses, or issues with any particular approach. You have to explore them yourself. It always pays to keep in mind that returns always carry risk, so if they don’t explain the risk, you have to dig it up on your own.
Do they promise the land? No finfluencer, blogger or Tik Toker has the secret answer to all your problems overnight. Times are tough and there are no easy answers, so chasing them will put you at risk of falling into mischief, or even worse, being taken for a ride.
Could this be a scam? If you have any doubts, it is worth assuming the worst.
Of course, one option is to avoid these videos altogether and go to trusted sources for your financial information, like The Yorkshire Post. Not only can you be sure you’re getting the full picture from the pros, but you’ll also reclaim hours of your life and avoid getting sucked into watching endless, pointless videos on social media.
Sarah Coles is a personal finance analyst at Hargreaves Lansdown