Financial literacy is skill which many parents and grandparents are keen to nurture in their children and grandchildren. With social media now a key route for young people to access information – including researching money and finance – it’s helpful to look at the role it can play. Stuart McCulloch, our Senior Executive Officer in the Middle East, explores whether social media is helping young people become more informed when it comes to finance.
Recent research paints a mixed picture about the financial literacy of young people. Only 47% of UK children aged 7-17 had ‘received a meaningful financial education’ at home or at school and 5.4m children don’t have the money skills they will need as adults. But talking about money seems to be easier – 76% of 18-24-year-olds discussed money at home when growing up, compared to 43% of people aged 65 or over. So open conversations are increasing, but is that translating into better awareness about money and how to manage it? Ultimately the need to build good financial habits and strong financial awareness into adulthood is an important life skill. And finding the best ways and means to do this can be a critical step. So where does social media fit in?
Does social media have a place?
Social media is now a tool in many of our lives, and even more so for younger generations. It also forms a key part in the research and information gathering process for children and grandchildren – even where money is concerned with 18% more likely to be influenced by social media information when making investment decisions. With digital now a fixture in our lives, information about any subject – including money, investments, crypto currencies and other financial topics – is just a click away. So there’s certainly a place in ensuring social media offers information to help connect and engage with a generation that may not be as receptive to learning about money from more traditional methods.
Embracing social media’s place in the world
Social media offers a chance to educate, gather knowledge, and self-learn new topics. Digital platforms, online forums and financial apps can certainly help fill the gap in the formal financial education that young people might be missing out on. Added to that it’s helpful to remember that self-learning is an important tool in itself, helping promote decision making – a great skill when it comes to managing money.
In fact social media may offer a way to distil some of the basics of finance including saving and investing through engaging and informative content which is tailored to younger audiences. Tools such as video and animations can help break down financial jargon and concepts into simple, understandable, bite-size content. This can certainly help financial topics feel more approachable, especially when you’re trying to get to grips with them for the first time. And seeing money and finance discussed on social media helps its importance resonate with young people by speaking to them through a medium they respect, trust and frequently use.
Balancing social media research and trusted advice
With any information source there are, of course, shortcomings. When it comes to financial advice social media is currently unregulated – and not all money influencers are likely to be qualified and regulated professionals. In fact those creating content may have conflicts of interest, or even financial relationships with the companies they endorse. So, as with other areas of life, it can be useful for young people to learn the value of a second opinion. Added to that is the fact that some areas of finance can be pretty complicated, and complex topics can be overly simplified with some fundamental areas – such as risk – not properly explored and explained. At the moment there’s little or no opportunity to flag incorrect, fraudulent or misleading content to the Financial Conduct Authority or local equivalents, although that may of course shift in the future just as we’ve seen with advice on the high street and online.
Today, social media platforms are a significant source of news and information. While they can be a helpful door opener to educate young people and prompt discussions about finance, it is essential to exercise caution. Informed financial decisions are always critical. It’s crucial to remember that social media is currently unregulated when it comes to financial advice, and not all influencers or sources are qualified and regulated professionals. As with any information source, it can be useful for young people to learn the value of a second opinion and seek advice from licensed and qualified financial advisers. Relying solely on social media for financial advice can have risks. In time, it’s likely that regulators will embark on educational campaigns to raise awareness about these risks.
In the meantime, supporting your children and grandchildren with additional information sources and emphasising the importance of diverse financial knowledge is a prudent approach.