Parents are relying more and more on social media as a way to teach their children about money management. A survey by Santander UK found that 1 in 5 parents think socials are more useful at teaching their kids about money than they themselves are.
Although we have seen the internet bring about tonnes of scams, parents still feel more unprepared and equipped than the online world is. In the survey, 42% of parents shared that they do not feel confident in terms of finance knowledge, so this makes it tricky for them to pass on money management skills, or even guide their kids on how to form healthy relationships with money and spending.
With that being said, though, 95% of the parents do still agree that they should play a better role in the financial education of their kids. How will they do this? Perhaps, turning to financial advisors may be the solution, especially with the rise of “finfluencers”.
Finfluencers And How They Are Giving Financial Education
Social media is seeing more financial influencers, or “finfluencers,” who share financial advice with their followers. These influencers have become popular sources of information, especially among younger generations. A study by the World Economic Forum and Accenture found that 60% of US investors under the age of 35 use social media for investment information, surpassing the 57% who rely on financial professionals.
The growth of financial advice content on social media has contributed to the “creator economy,” valued at around $127 billion globally. Financial institutions are more than ever using social media introduce audiences to their products and services, by taking advantage of the popularity of these digital influencers as a way to grow clientele. This is indeed a new era for financial advice as digital channels are being used as tools to help existing solutions.
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Why Online Financial Advice Can Be Good Or Bad
Social media has made financial topics more engaging and accessible through short, entertaining videos. This format appeals to investors who maybe find traditional financial advice less approachable. Using memes and metaphors, finfluencers make learning about money management more relatable and fun.
The quality of advice on social media differs. Algorithms often prioritise catchy posts over content accuracy, leading to a limited understanding of financial topics. The credentials of finfluencers also differ, so new investors cannot fully trust the reliability of advice.
There are risks associated with this trend, including misinformation and conflicts of interest. Some influencers earn money through brand partnerships and ads, which may affect the objectivity of their advice. Social media has created inclusive communities where people can openly discuss personal finance, crossing geographical and cultural boundaries.
In 2022, reality star Kim Kardashian faced a lawsuit after promoting financial advice. Celebrities, like Kardashian, can be paid to promote financial products without telling their audiences, leading followers to believe in the legitimacy and profitability of the investment without enough information.
What Are Parents Doing To Learn?
Parents who struggle to discuss money with their children seek help from different places and platforms. The Santander survey shows that 24% of parents would appreciate official guidance from schools or the government on how to approach financial topics. Another 24% would find value in an online community that offers support and advice.
23% of them are open to receiving tips from their banks on how to explain financial concepts to their children. Banks like Santander are responding to this need by providing resources and advice on their websites, as a way to help parents become more confident in discussing money matters with the kids.
