Wednesday, November 29, 2023

Even Bad Money Advice Can Help You

BusinessEven Bad Money Advice Can Help You

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It’s no secret that the younger generation of consumers is increasingly turning to social media to learn about their own personal finances. A 2023 retail investor survey by robo-advisor Betterment found that more than half of Gen Z (65%) and millennials (55%) get advice from social media.

And with more and more money trends taking over social media apps today and influencing how we “should” be using our money — “bougie broke” scenes, “no-spend” challenges, “make the money back” mindset, “cash stuffing” method, “girl math” and so on — we wanted to know when social media money advice is worth it and how it can play a role in our money decisions.

Below, Dan Egan, a VP of behavioral finance and investing at Betterment, weighs in on the survey and provides some psychological context to help you next time you’re scrolling.

When social media money advice works

How to find a financial advisor

FPA PlannerSearch® can help you find a Certified Financial Planner™(CFP®) near you, and you can also filter by specialties such as budget and debt management, buying a home, career change, minority financing, retirement, or even men’s and women’s finances.

For more wealth management advice, Zoe Financial can match you with a financial advisor or financial planner.

Egan speculates that one of the reasons people keep coming back to social media, despite their doubts about some of the advice they find there, is that they find the stories, tips and hacks relatable in a way personal finance advice from traditional sources isn’t. “[People posting] are supplying info that is attractive to different types of people,” he tells CNBC Select.

If you come across someone telling you what to do with a bonus paycheck and that person looks like you or is also a single mother like you, for example, you’re inherently going to connect with them without thinking about it.

People can get more comfortable and interested in making smart money moves like saving in an emergency fund, saving in a 401(k), etc, because they see the person giving the advice is similar to them in some way, Egan explains. “They get to that point because they felt [a] connection to someone who said that on social media,” he says. In fact, 70% of respondents from the Betterment survey report feeling that the coverage they find on social media addresses their needs.

See social media as the first step

Mint

Information about Mint has been collected independently by CNBC Select and has not been reviewed or provided by Mint prior to publication.

  • Cost

  • Standout features

    Shows income, expenses, savings goals, credit score, investments, net worth

  • Categorizes your expenses

    Yes, but users can modify

  • Links to accounts

    Yes, bank and credit cards

  • Availability

    Offered in both the App Store (for iOS) and on Google Play (for Android)

  • Security features

    Verisign scanning, multi-factor authentication and Touch ID mobile access

You Need a Budget (YNAB)

Information about You Need a Budget (YNAB) has been collected independently by CNBC Select and has not been reviewed or provided by YNAB prior to publication.

  • Cost

    34-day free trial then $99 per year or $14.99 per month (students who provide proof of enrollment get 12 months free)

  • Standout features

    Instead of using traditional budgeting buckets, users allocate every dollar they earn to something (known as the “zero-based budgeting system” where no dollar is unaccounted for). Every dollar is assigned a “job,” whether it’s to go toward bills, savings, investments, etc.

  • Categorizes your expenses

  • Links to accounts

    Yes, bank and credit cards

  • Availability

    Offered in both the App Store (for iOS) and on Google Play (for Android)

  • Security features

    Encrypted data, accredited data centers, third-party audits and more

Fidelity Investments

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go® account, but minimum $10 balance for robo-advisor to start investing

  • Fees

    Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go® has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over and this includes access to unlimited 1-on-1 coaching calls from a Fidelity advisor)

  • Bonus

  • Investment vehicles

    Robo-advisor: Fidelity Go® IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA®

  • Investment options

    Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares

  • Educational resources

    Extensive tools and industry-leading, in-depth research from 20-plus independent providers

Charles Schwab

  • Minimum deposit and balance

    Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One® Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit

  • Fees

    Fees may vary depending on the investment vehicle selected. Schwab One® Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract

  • Bonus

  • Investment vehicles

    Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One® Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™ and Schwab Organization Account

  • Investment options

    Stocks, bonds, mutual funds, CDs and ETFs

  • Educational resources

    Extensive retirement planning tools

Bottom line

While social media shouldn’t be your only source of financial education, it can provide engaging content that inspires you to take better control of your money. Always filter the information you find through sources you trust, and try to balance your enthusiasm with a healthy sense of skepticism.

Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance and investment review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of personal finance and investment productsWhile CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best personal finance apps and investment accounts.

Catch up on CNBC Select’s in-depth coverage of credit cardsbanking and money, and follow us on TikTokFacebookInstagram and Twitter to stay up to date.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.



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