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Social media has become an integral part of our daily lives. These are places where we can connect with friends and family, share our opinions, and discover new ideas. Unfortunately, social media is a double-edged sword when it comes to financial education. On the one hand, it offers free access to financial information that can help you make smarter decisions. But on the other hand, it also perpetuates financial myths and half-truths that can do more harm than good.
2 out of 5 Americans receive financial advice from social media
According to a recent survey, 39% of Americans receive their financial advice online or from social media. The most popular place to get financial advice is YouTube for Generation Z (63%) and millennials (71%). TikTok is quickly gaining ground as a platform for financial advice, especially with Gen Z (56%).
More than 60% of those surveyed stated that they have acted on the advice they received online. While social media and online advice have made it easier to access financial tips, there are scammers or supposed financial experts giving bad advice out there.
Let’s debunk five financial lies that are commonly spread on social media.
1. You can get rich quick with no effort or risk
We’ve all seen the posts about the latest “get rich quick” scheme or the overnight success story that promises millions with no risk or effort. While it’s true that some people have struck it rich through investing or entrepreneurship, the reality is that it takes hard work, patience, and a bit of luck to build wealth.
Investing always comes with risk, and there’s no guarantee of success. Don’t fall for the myth that you can become an overnight millionaire without putting in any effort or taking any risks.
2. Debt is always bad
Debt is a tool that can be used to achieve your financial goals, such as buying a home or starting a business. While it’s true that high levels of debt can be dangerous and lead to financial hardship, not all debt is created equal.
Mortgage debt, for example, can help you build equity and provide a stable place to live. Don’t fall for the myth that all debt is bad; instead, learn to manage your debt responsibly and use it to your advantage.
3. Investing in cryptocurrencies is the fastest way to get rich
Cryptocurrencies have become a hot topic on social media, with many individuals touting their success stories from investing in digital currencies such as Bitcoin. However, investing in cryptocurrencies can be incredibly risky and volatile.
The value of a cryptocurrency can fluctuate significantly in a short amount of time, leaving investors vulnerable to significant losses. Additionally, digital currencies are currently unregulated, making them an easy target for scams and fraud.
If you are interested in investing in cryptocurrencies, it is essential to understand the risks involved and to invest only what you can afford to lose.
4. Credit cards are evil, and you should avoid them at all costs
Credit cards have become a financial tool that many people love to hate. While it is true that credit cards can lead to debt and financial hardship, if they’re used responsibly, they can be a valuable financial asset.
Credit cards can help you build your credit score, earn rewards points, and provide you with a safety net in case of emergencies. Fraudulent purchases made on your credit card are also protected by federal law. Many credit card companies offer a $0 liability policy, so you aren’t held liable for fraudulent activity.
However, it is crucial to use credit cards responsibly and only charge what you can afford to pay off each month. Additionally, you should avoid carrying a balance so you don’t rack up high interest charges and fees.
5. The higher the income, the happier you’ll be
It is easy to fall into the trap of believing that a higher income equals a higher quality of life. While having financial stability and security can certainly contribute to happiness, it is not the only factor.
In fact, studies have shown that once basic needs are met, there is little correlation between income and happiness. Instead, focusing on meaningful relationships, a healthy work-life balance, and engaging in activities that bring you joy are more significant predictors of overall life satisfaction.
Social media can be a great source of financial education, but it’s important to learn to separate fact from fiction. By avoiding these five financial lies and educating yourself on the basics of personal finance, you’ll be better equipped to make smart financial decisions and achieve your goals. Remember, building wealth takes time and effort, but it’s worth it in the end.
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