Financial Literacy in the Age of Social Media - A Navigation Guide for Young Adults (and everyone else!)

The Social Media Generation - a generation where social media reigns supreme at the tip of our fingers on devices so powerful that the they could have run the nation back in the 19th century. Young adults living in this generation are constantly bombarded with information, trends, and advice - some of which can have profound impacts on their current and future financial situations. As a CPA and a professional dedicated to enhancing financial literacy, it is crucial to address the importance and provide a solution (or a navigation guide) for young people navigating through these digital landscapes.

The Influence of Social Media

Instagram, Tik Tok, YouTube, LinkedIn, and X have transformed how we consume information. While these are powerful tools for learning, they present a host of challenges due to the ease of entry and the great reach that they provide. Although many have used this tool to share ideas and teach others how to do things the right way, the glamorization of wealth and only showing the best of the best (aka highlight reel) can often lead to unrealistic expectations regarding what real financial success looks like.

Young adults often find themselves comparing their lives to curated posts, feeling pressure to "keep up with the Joneses" and achieve similar lifestyles without understanding the financial consequences that may arise from these decisions. Instant gratification is a terrible drug and it is one that many in the social media generation crave, and it's a dangerous one.

"Shut Up and Take My Money!"

With the rise of social media and the improved accuracy of algorithms, online shopping has never been easier. Funny memes like the one below enable people to make jokes with friends about buying things, but memes are only a (funny) reflection of the truth. Send the meme and the next thing you know, a package shows up at your door with your name on it with 13 fidget spinners.

From social media to cart checkout, it takes as little as 5 clicks to buy something.

Trust me, I tried it.

1. See social media post on Instagram
2. Click shop now -> directed to retailer's page
3. Click add to cart
4. Finish check out -> enter details + payment (one-click with G-Pay / Apple Pay)
5. Purchase

It's VERY easy. And this is where many people fall into traps like credit card debt (and sometimes hoarding) with balances that aren't fully paid off. This is where compound interest works AGAINST YOU. It's not good when this happens and it can take a long time to get out of it.

The $500 TV that you bought on a credit card that takes 6 months to repay could cost you a total of $800 after interest charges are added in.

Combating The Financial Illiteracy Epidemic

How many more surveys, articles, posts, etc need to come out for us to realize that this is a global problem? Every adult we speak with about financial literacy agrees that there is a lack of teaching this to young adults. Doctors, Accountants, Lawyers, First Responders, Entrepreneurs, and everyone else we've talked to has agreed. So how can we better prepare our current and future generations for financial success?

1. We can provide them with the right tools and guidance to help them make the right decisions. How to budget, manage cash flow, needs vs wants, pay yourself first, etc.
2. We can teach them the impact of irresponsible financial decisions made today and how it impacts their future.
3. We can show them the value of long term investing and how a time is their best friend when it comes to building wealth. Delayed gratification.
4. We can openly talk about money so it's not something they feel scared or shy to talk about.
5. We can education and listen without criticizing and shaming. Money is sensitive and must be approached the right way.
6. We can hire Nelson (plug) to give a keynote talk on the topic, facilitate workshops, build programs, create courses and platforms to rollout to the masses to provide the necessary tools and education for FINANCIAL LITERACY SUCCESS. Please email me at [email protected], I'd love to help make this happen.

A Navigation Guide For Young Adults (and everyone else!)

The more we know, the more we can share, the more we share, the more we know. Life is school and the cycle of learning should never stop. Whether you're a young adult or young at heart, this quick navigation guide can help point you in the right direction.

If you want to improve you financial literacy, you must master these fundamentals:

1. Understand the Basics

• Budgeting: Track your income and expenses. Use apps or spreadsheets to manage your budget effectively.
• Saving: Aim to save at least 20% of your income. Start with an emergency fund covering 3-6 months of living expenses.
• Debt Management: Be mindful of credit cards and loans. Pay off high-interest debt first and avoid unnecessary borrowing.

2. Set Financial Goals

• Short-Term Goals: Think about upcoming expenses, like vacations or new tech.
• Long-Term Goals: Consider saving for a house, retirement, or education. Use specific timeframes and amounts to keep you motivated.

3. Educate Yourself

• Resources: Explore online courses, podcasts, and books focused on personal finance. Follow credible financial influencers and educators on social media.
• Workshops: Attend community workshops or webinars that cover topics like investing, saving, and budgeting.

4. Start Investing Early

• Retirement Accounts: If your employer offers a retirement plan, contribute enough to get any matching contributions. Consider opening an IRA.
• Investment Apps: Use user-friendly platforms to start investing, even with small amounts. Learn about stocks, bonds, and mutual funds.

5. Stay Informed

• Current Trends: Keep up with financial news and trends that can impact your finances. Use reputable sources to avoid misinformation.
• Beware of Scams: Be cautious of offers that seem too good to be true. Always verify information before making financial decisions.

6. Build a Support Network

• Talk About Money: Share financial goals and challenges with friends or family. Create a support system to stay accountable.
• Seek Professional Help: If needed, consult with a financial advisor for personalized guidance.

7. Practice Smart Spending

• Needs vs. Wants: Differentiate between essential and non-essential purchases. Delay impulse buys to assess their necessity.
• Shop Smart: Look for deals, use coupons, and compare prices to maximize your budget.

Navigating financial literacy is a challenge for young adults aiming for financial independence and stability given the rise of social media. Be mindful of who you follow, what you listen to, and the actions that follow.

Start with the basics, set goals, and educate yourself to make informed financial decisions. Remember, it’s never too early (or too late) to take control of your financial future!

Seriously, email me at [email protected] and let's chat about how we can help make the world a more financially literate place. Chat soon!