Can you get financial advice on TikTok?

TikTok has become a popular social media platform for lip syncing, sketch comedy and viral dance crazes over the last few years. But TikTok is no longer just a place where you can laugh and catch a vibe to the latest choreography.

From recipes to makeup tutorials, TikTok now has it all — including advice on how to manage your money. The next time you open up the app, you might see a TikTok influencer dishing out information on topics like how to build credit and budget your cash.

Can you take financial advice from TikTok? Short answer — yes. But as with any other social media platform, some people are worth following and others are giving bad advice. Here are some things to think about before taking TikTok money advice.

Consider the source

Delivering TikTok money tips with music and dancing may be unconventional, but that’s not necessarily a bad thing, especially because personal finance can be an intimidating topic.

“TikTok is fantastic for financial literacy and empowerment for people who are on the wrong side of the financial gap,” said Claire Hunsaker, a Certified Financial Education Instructor (CFEI) and founder of AskFlossie. According to Hunsaker, women, people of color and other groups are building supportive, educational and inspiring content on TikTok to lift their communities.

A TikTok influencer may not look like the average financial expert of yesteryear, but that doesn’t mean they don’t have valuable information to share to their TikTok followers. “TikTok gets a lot of hate as a platform,” said Jake Founder, founder of DebtHammer, a personal finance publication that helps people make better financial decisions. That hate may stem from the fact that it’s aimed at a young demographic, and most of the people producing content are young, but Founder says there are some knowledgeable people on it wanting to share good information with their Gen Z audience.

The flipside to that, though, is that there are some people trying to cash in on the hype, and there’s money to be made — top TikTokers are reported to make millions of dollars per year.

Before taking a piece of financial advice, consider doing some digging into the source before you believe a TikTok creator. “The first thing you should do is look up the creator’s name to see if they’re remotely involved in the financial sphere,” said Founder.

If they aren’t, Founder says it doesn’t automatically mean their advice isn’t good; you should just try to cross-reference their advice with other reputable sources to see if it checks out.

Be very cautious of investing advice

Due to such factors as the market’s strong performance in 2020, the meteoric rise in the price of cryptocurrencies this year, and the bizarre meme stock/ GameStop situation earlier this year, people have a heightened interest in (and fascination with) investing.

Naturally, to feed that interest, influencers are using their platforms to discuss ways to put money into the market. While someone may be able to explain investment strategies in general terms, there are credentials necessary to offer investment advice, especially if you charge for it. Even for those doling out free advice on their TikTok account, keep in mind that investing comes with risk, and some influencers are discussing strategies where a lot of money can be lost.

Last year, a viral TikToker showed the process of options trading by investing $15,000 in Tesla calls. At one point, he was down $7,000, which would be no small sum for the average American. While he did put out a firm disclaimer — “please, don’t try this at home” — it’s an example of an investing strategy on TikTok that could cause you to lose a lot of money.

Julian Morris, a Certified Financial Planner professional and founder of Concierge Wealth Management, says few licensed financial professionals are giving advice on the social media platform, so beware. “It doesn’t mean you can’t follow someone’s budget hacks, but use extreme caution when taking advice about cryptocurrency, securities, exchange-traded funds, mutual funds or other real investments from someone on TikTok.”

If it sounds too good to be true, it probably is

Financial gurus are another thing to watch for, says Hunsacker. “If someone is going to tell you how to make a million dollars in 60 seconds, they are leaving out a lot.”

In some cases, advice could be illegal. Social media, including TikTok, has been a hotbed for bad tax tips. For example, some users preach the benefit of forming an LLC as a way to write off a bunch of expenses, including personal ones. Make no mistake — this may be tax evasion. (Before forming a business entity, it’s probably a good idea to speak with an attorney or an accountant instead of using information from a TikTok content creator.)

Keep in mind that not every TikTok star or personality on social media gives out advice for the betterment of others. “People on TikTok are more concerned with monetizing their following and generating likes and revenue for themselves than they are with helping you achieve financial success,” said Morris. This could motivate some to intentionally or unintentionally give exaggerated advice to create a viral moment.

General advice is often the most helpful

If you look past the click-bait advice that could lose you money or get you in trouble with the IRS, there’s a wealth of general information on the TikTok app that may be helpful to people who haven’t had a formal introduction to personal finance concepts. If a TikTok star is solely trying to boost their engagement and create a viral TikTok video, maybe try to stay away from this account.

For example, Vanessa Aragon’s channel teaches mortgage basics, such as how much you need to save up for a $450,000 home. PaydayPursuit channel has tips on side hustles. Lessons on the difference between a credit card and debit card, the importance of emergency savings, how student loan interest works and what happens during the homebuying process could all be valuable when taught through a short video in an engaging way.

Who would have thought the TikTok app would turn into a platform where you can keep up with the latest fashion trends and learn how to get your financial life together?

Remember, personal finance is personal

Whether you’re getting financial advice from an article or watching real money tips on YouTube, Facebook, Instagram, or TikTok, you should make sure it makes sense for your unique situation before applying it.

TikTok is much like any other platform where there are people giving out good advice based on a desire to help people. You can find these people by doing a bit of research into who they are and doing your own fact-checking on the advice they give to make sure it’s legit. Ultimately, the platform might be new, but finance advice — good, bad and weird — has been around as long as the market has. Time-tested rules of doing your due diligence still apply.