FinTok: how TikTok is helping young people use cash wisely

Sea shanties and viral dance trends have helped make TikTok a hit since the start of the pandemic. In 2020, the social media app, which allows users to create and share one or more 60-second films soundtracked with music clips, surpassed 2bn global downloads.

In the financial world, TikTok has a reputation for promoting volatile cryptocurrencies and activist investing – interest in Dogecoin and GameStop has been fuelled by the platform. But, beyond the jokes and rocket emojis being shared by some users, there is a wealth of practical personal finance videos that are teaching young people how to use their money better.

This financial TikTok space, dubbed FinTok, is global and growing. Content tagged with the hashtag #stocktok has been seen by users 1.4bn times, while the slightly more mundane #PersonalFinance has garnered more than 4.4bn views. Tagged videos cover everything from budgeting to Isas, from taxes to debt.

What is remarkable about FinTok is not the content of these videos but their reach: young people who might have otherwise been uninterested in personal finance are engaging with it. People are thinking about their money, and how to make it work for them, earlier and with more care. Some are even taking their first steps into investing inspired by short videos they have seen on social media. For many generation Z and millennial users, TikTok is their first and only source of education on money matters.

Ava Montgomery, 17, came across personal finance when her favourite creators on the site shifted into FinTok. “A lot of their videos are advice-based, and a lot of that tends to be around finance,” she says. She is still in the sixth form, and, by her own admission, not yet at the stage of life to act on it, but she has already learned about credit and mortgages while scrolling on her phone. “I have taken into account how much I’m going to need to think about that stuff when I’m older,” she says.

Figures shared with Guardian Money by the investment firm Hargreaves Lansdown show that 46% of 18- to 34-year-olds have become more interested in investing over the past six months, and one in five attributed this newfound enthusiasm to TikTok.

Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown, says: “Social media and trading apps really have democratised the whole investment process.”

Tips and advice

TikTok recommends videos to its users based on how they have previously watched its content, creating a personalised feed called the For You page (FYP). Unlike other recommendation systems, the FYP deliberately includes a range of diverse and random videos, even if they appear irrelevant to the user’s interests, in an algorithmic effort to avoid “filter bubbles”. As a result, users can come across FinTok videos despite having never shown interest in personal finance before.

Even if you use the platform purely for entertainment, this random feed means you can end up inadvertently engaging with educational content. Laura Pomfret, 33, one of the founders of the personal finance brand Financielle, says this is what she likes about TikTok.

Laura Pomfret
Laura Pomfret and her sister started Financielle on Instagram and have since expanded to TikTok. Photograph: Laura Pomfret

Laura and her sister Holly Holland, 31, started Financielle on Instagram and have since expanded on to TikTok, amassing more than 22,000 followers. Their content ranges from simple explainers to putting a financial spin on the latest TikTok trends and songs.

One recent video explores the question should I rent or should I buy? and features Laura in a garden, explaining rising house prices and market appreciation. Her friendly Mancunian accent and simple language make the daunting issue clear and easy to understand. She ends the 60-second video saying that there are no rules, encouraging viewers to decide for themselves and “bear in mind these factors when considering renting versus buying”.

A Financielle series, called Definition of the Day, breaks down financial jargon. One video explains greenwashing – a term regularly used on social media and often misunderstood. In less than a minute, Financielle’s intern Lucy defines the term: “Basically, it’s deceiving consumers into believing that a company’s products are environmentally friendly.”

The Financielle sisters’ aim is to make content that can act as “someone’s financial best friend”, Laura says: “This isn’t financial advice; this is the bit before it.” They describe their content as “like the couch to 5K” app, which was developed by the NHS to encourage people to take up running. It is about “breaking things down” and creating a plan, Laura says.

Laura and Holly are looking to expand their demographic, with the aim of reaching generation Z “before they make some bad life choices at ages 21 to 25, like we all probably did”. They anticipate: “TikTok’s going to be a massive driver for that.”

A younger creator, @pokubanks, also sees his platform as a space for education. David Poku, 20, started making personal finance videos on TikTok in January 2020, and boasts more than 330,000 followers. His interest in money started “because of the absence of financial literacy in school”, he says. When he was in the sixth form, he realised that he had never learned about taxes, investing or debt, so he taught himself and enrolled in the University of Nottingham to study finance, accounting and management. “I make some of my content from my lectures, literally,” he says.

David Poku
Many of David Poku’s videos try to educate viewers about how to navigate the onslaught of information. Photograph: David Poku

Poku’s typical video takes a conversational, question-and-answer style. In the wake of May’s cryptocurrency crash, Poku published a video in which he acted as a “naive investor” in a black tracksuit and an “experienced investor” in a plain fitted T-shirt. He explored the question of whether people who had bought crypto should sell their coins at a low price or ride the wave of speculation. The more experienced character told the other: “Only invest what you can afford to lose.” Poku says he is summarising the wisdom of established businessmen such as Warren Buffett, “and adding my twist to it so that people can understand the message”.

Poku is wary of the risks of unregulated online advice, so many of his videos seek to educate viewers about how to navigate the onslaught of information. A recent video marked with the hashtag #FactCheckYourFeed was part of a campaign by the site and the charity Citizens Advice.

Poku’s video gives three tips to avoid scams online. He tells viewers it is a “bad sign” if you are asked to pay for something quickly or in an unusual way, that they should avoid giving away personal bank details or passwords, and should not rush into any decisions.

Other films in the campaign have been made by @thatmortgageadvisor, an independent UK mortgage broker, and @tejlalvani, a chief executive and dtar of BBC Two’s Dragons’ Den. The videos in the #FactCheckYourFeed campaign will cover financial terminology, research methods and how to make informed decisions.

When 27-year-old Andra Maier, who lives in London, was furloughed from her job in fashion PR last year, she turned to TikTok in search of budgeting techniques. “Now my For You page is mostly financial advice,” she says.

Andra Maier
Andra Maier turned to TikTok for advice on budgeting when she was furloughed from her job in fashion PR. Photograph: Alina Raducea

Maier remembers specific helpful videos rather than individual influencers. She recalls that one creator explained how to use a Google Form for budgeting, which made Maier ask: “Why did I never do this?” She has created budgets in this way ever since and it has given her an increased awareness about what she is spending money on. She says: “I have a Google Form, I input every single thing I spend, and then it goes into its category.”

Based on Maier’s interests, TikTok showed her more finance videos, which encouraged her to shift from planning to investing. Because she saw “repetitive information” on TikTok, she felt confident enough to make her first trades.

She went to Hargreaves Lansdown and invested in a portfolio of low-risk stocks and funds. Then she downloaded several new investing apps popular on TikTok, such as Plum, through which she made higher-risk trades with smaller chunks of money. She sees TikTok as the first point of information, explaining new concepts such as “compound interest” in simple terms, and showing her what to research in greater depth elsewhere.

What to bear in mind about the videos

However, these simple and snappy FinTok videos are not universally popular. At 37, Matthew Flower from Saffron Walden is older than the typical TikTok user. He downloaded the app “to keep abreast of what my children are actually doing online”, then stumbled across the app’s many personal finance videos. He’s not a fan. “Most of them are awful,” he says.

One problem for UK users is that the majority of FinTok content is American. “Obviously, there’s a difference in our financial systems,” Flower says. But the bigger problem, he says, is that people might take influencers’ “statements as fact, without doing their due diligence”.

Nigel Frith, an FCA-accredited analyst from the website AskTrader, says the emergence of online platforms and the opportunity to act immediately has “brought the Wall Street or the London Stock Exchange experience to consumers”.

But he is also concerned about the dangers that come with such a low barrier to entry. All you need to start posting videos to TikTok is the app. The ability to go viral on the FYP, easier than on other social media according to creators, means information might be viewed hundreds or thousands of times without the need to establish the trust of committed followers.

Nigel Frith
Nigel Frith says online platforms and the opportunity to act immediately has ‘brought the Wall Street or the London Stock Exchange experience to consumers’. Photograph: TikTok

The dangers of unregulated influencers are starker when it comes to personal finance than in other genres because there is a risk that they could engage in market manipulation by giving tips that benefit their own investments.

Hargreaves Lansdown’s Streeter says it is difficult to know “the motives of these people” on social media. And she says if something is wrong “it’s not easy to censure an influencer at the moment”.

As Guardian Money went to press, it emerged that TikTok had banned branded content promoting financial services and products, including everything from cryptocurrency to debit cards. The extent of the ban is not yet clear, but it does suggest TikTok is taking action to reduce the potentially harmful content on the site.

Myron Jobson, personal finance campaigner at website Interactive Investor, says the change “will hopefully mark the end of dubious and outright misleading adverts of high-risk investments as well as highly volatile cryptocurrency on the platform. The hope is that TikTok’s systems are robust enough to detect and weed out content that falls foul of its revised policy.”

A TikTok spokesperson says: “Keeping our community safe is a top priority,” and that this is why it launched the #FactCheckYourFeed campaign. It posts a public service announcement on financial advice hashtags, reminding users that investments involve risks. The spokesperson says: “Our guidelines make clear that we do not permit content that brings about financial or personal harm – and we have specific rules banning pyramid, Ponzi or similar schemes.”

Even if the rules tighten in the future, FinTok is going nowhere. The viewers and the influencers see TikTok as filling a vital knowledge gap for the UK’s youth, and many creators such as @financielle and @pokubanks actively support some form of regulation.

For now, in the wild west of personal finance videos, the advice is simple: do your own research, don’t make a financial decision just because it is trending, and keep your options open.

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