Social media can be a double-edged sword. It puts an abundance of information right at your fingertips, but it also provides a forum where anyone can appear to be an expert about anything. While you can find great tips for budgeting and saving money on social media, it should not be your only resource for personal finance advice.
There are a few tips that you should keep in mind when taking money management lessons from fellow social media users:
Tip 1: Avoid “get rich quick” schemes.
There are no secrets or shortcuts to building wealth. If something sounds too good to be true, it most likely is.
People are very emotional when dealing with finances. Scammers know this and use it to take advantage of vulnerable consumers. They tout investments or products that are supposed to be guaranteed to help you build wealth—while at the same time draining your wallet.
Steer clear of anyone claiming that he or she can help you build your investment portfolio or savings overnight. Everyone wants their money to grow, but you can’t allow this desire to cause you to make bad decisions and risk losing your savings on false promises.
Tip 2: Check your sources.
We usually trust our family and friends the most, but that doesn’t necessarily mean we should trust the financial advice they are sharing.
You may assume that if information comes from a family member or friend, that information is good and reliable. But there’s no way to tell where that information is coming from; it could be a stock tip a friend overheard from a plumber or something a relative read while surfing the Internet.
Unless your friend or family member is a financial advisor, don’t assume he or she is sharing credible financial advice. Always double-check to find out the original source of the information.
Tip 3: Be wary of so-called experts.
Always keep in the back of your mind the following truths when searching for personal finance experts on social media: There are no free rides, everybody wants your money, and you can’t believe everything you read. If you can spell “finance expert,” you can call yourself one. Just because someone has a blog, website, Facebook page, or other social media account that claims he or she is a finance expert doesn’t mean that person actually is an expert.
If you are thinking about relying on someone who is posting to a social media site, take the time to verify that person’s credentials first—and keep in mind that all credentials aren’t the same.
You don’t have to be paranoid, but it might make sense to be just a little skeptical when using social media for money advice. Always verify the person, organization, or company giving the advice before making any decisions about your hard-earned money. If you can’t verify the source, you may want to think twice about taking that personal finance advice.
Steve Repak is a CERTIFIED FINANCIAL PLANNER™ professional, CFP® Board Ambassador, and financial literacy speaker. He is also an Army veteran and the author of Dollars & Uncommon Sense: Basic Training For Your Money. Follow him on Twitter: @SteveRepak