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Scrolling through TikTok, you come across a huge range of videos, from people dancing to Doja Cat to someone encouraging you to invest in Tesla. Financial TikTok, also known as FinTok, is where individuals share advice on topics from investing to cryptocurrency to saving for retirement.
Yet, just like a big chunk of the news you find on social media, there are lots of FinToks containing misinformation. Anyone can post on TikTok, so there’s no guarantee that you’re being provided with sound financial advice or that the person is qualified to talk about personal finance. Furthermore, while some of the financial advice found on TikTok may be accurate, it’s not one-size-fits all information that’s specific to an individual’s financial needs.
Select fact-checked five popular personal finance TikToks, each with more than two million views, and spoke with two financial advisors to get their thoughts on whether the advice is accurate and worth following.
1) The Personal Finance Starter Pack: Age 18.
In this TikTok by Humphrey Yang, a former financial advisor with a popular personal finance TikTok and YouTube channel, Yang provides three personal finance suggestions for teenagers who just turned 18: open a checking account, build your credit score and open a Roth IRA.
Is this good advice?
Yes, it’s good advice. Though our financial expert argues you don’t need to worry about your credit score when you’re 18.
First off, starting to save for retirement early is always better than later. Since most 18-year-olds don’t have full-time jobs or access to a 401(k) through their employer, a Roth IRA is a good way for teenagers to put money, that’s already been taxed, toward retirement.
With a Roth IRA, you won’t have to pay taxes on that money when you begin withdrawing it in your non-working years. And by starting young, you have more time to take advantage of compound interest.
Opening a checking account is another good idea for teenagers who’ve never had their own bank account and need an easily accessible place to keep their money. When choosing a checking account, you should look for one with no monthly maintenance fee, no minimum balance requirement and a low initial deposit.
If you have more than a couple month’s worth of living expenses saved up in a checking account, you could also opt to save the excess in either a high-yield savings account, …….