If you’ve ever found yourself going down the rabbit hole of viral TikTok reels, you know the power these can have on you.
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From dietary habits to recommended books, social media trends hold tremendous sway. Especially when it comes to your money.
“Since TikTok trends influence spending behaviors and financial decisions, they significantly impact personal finances,” said Ethan Keller, a finance expert and the president of Dominion.
TikTok and other social media platforms showcase glamorous lifestyles and spending habits which influence viewers to follow suit. “This can lead to increased spending on non-essential items, fostering a culture of consumerism and impulse buying,” added Keller.
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TikTok trends significantly influence personal finance behaviors due to their viral nature and the way they tap into social and psychological triggers.
“These trends often offer seemingly simple and accessible solutions to financial management, which can be both beneficial and detrimental depending on the context and execution,” warned Dennis Shirshikov, head of growth at GoSummer.
“The ‘bougie broke’ trend, for instance, showcases individuals who appear affluent but are financially strained.”
He continued, explaining that these trends can lead to increased consumerism and poor financial decisions as people try to keep up with the appearance of wealth.
Justin Godur, a financial advisor and the founder of Capital Max, has seen clients fall into the “bougie broke” trap, where he said, “the pressure to maintain a lavish lifestyle for social media leads to overspending.”
This trend, he added, glamorizes luxury living without addressing the financial strain it imposes. The constant chase for approval can result in mounting debt and a distorted sense of financial security.
David L. Blain, a chartered financial analyst (CFA) and the CEO of BlueSky Wealth Advisors, has seen many trends come and go over the course of his career. According to him, the current craze of TikTok finance hacks is concerning because while well-intentioned, it often promotes unrealistic or unsustainable practices.
Blain continued, saying, “Cash-stuffing, for example, is the idea of taking all of your money out of the bank and literally stuffing it in envelopes to curb spending.”
He explained that while this may work in the short-term, it prevents your money from earning interest and isn’t a practical, long-term solution.
Godur similarly agreed. “Cash stuffing, while seemingly a return to traditional budgeting, can also be misleading. The trend encourages people to withdraw cash and allocate it into envelopes for specific expenses.”
While this method can promote discipline, Godur warned that it lacks the flexibility and security of digital banking. Misplacing cash or underestimating expenses can quickly derail a budget, leading to unexpected financial shortfalls.
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Godur also noted the “loud budgeting,” trend that “promotes an open discussion of personal finances, which is beneficial for breaking the taboo around money.”
However, the performative aspect can lead individuals to make financial decisions based on what will garner the most likes and shares, rather than what’s truly best for their situation.
“This can create a mismatch between financial goals and actions, potentially exacerbating financial stress,” said Godur.
Shirshikov made similar observations. He added, “Loud budgeting, which involves openly sharing one’s budgeting process and financial goals on social media, can create accountability and community support. However, it can also lead to privacy concerns and unrealistic comparisons.”
Godur said, in order to combat this mismatch in his practice, he emphasizes the importance of aligning financial behavior with personal goals, rather than succumbing to social media trends. To him, it’s crucial to critically evaluate the long-term impacts of these trends and adopt strategies that genuinely enhance financial well-being
“By understanding the underlying motivations and consequences of these trends,” continued Godur, “we can make informed decisions that support a healthier financial future.”
Public discussions on budgeting strategies can also normalize certain financial behaviors without considering their context.
“Due to this normalization, people may adopt spending habits that do not align with their long-term financial goals and stability,” said Keller.
This influence is most prevalent among younger audiences as they navigate financial independence.
Keller said, “While social media can provide financial advice and trends, it’s important to assess them carefully and practice financial knowledge.”
Blain similarly agreed. “While social media finance trends may be attention-grabbing, most certified financial planners would not recommend them,” he said.
The foundations of good financial health — spending less than you earn, paying off debt, saving for important goals and investing for the long run — are not exciting, but they work.
“TikTok finance hacks are like crash diets: appealing but rarely effective,” Blain added. “For real results, stick to the basics.”
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This article originally appeared on GOBankingRates.com: 4 Ways TikTok Trends Affect Your Money
