Americans under 30 get much of their news on TikTok, and hear financial guidance too. That’s shaping the way they save, spend and view their financial prospects, young adults and economists say. Although the platform faces a potential U.S. ban, it remains a cultural force that shapes young adults decisions and views. Over half of all U.S. adults ages 18 to 34 use it, according to Pew Research Center; about a third of those 29 and under say they regularly get news on TikTok, up from less than 10% in 2020.
TikTok is creating a disconnect between how well off young adults actually are and how they think they’re doing. The disconnect gave rise to a term financial advisers use to describe young adults’ distorted view of their financial well-being: “money dysmorphia.” “It doesn’t feel like the norm is your normal,” says H, who lives in Nashville with her husband and 20-month-old son. As she perceives the economy on TikTok and other social media, her feed feels split in half, between those living an enviable life and those who struggle. Many markers of adulthood, such as homeownership, feel out of reach and seem impossibly far.
The economy itself adds to the confusion. After a string of data showed strength in the labor market, growth is slowing. U.S. employers added a seasonally adjusted 175,000 jobs in April, less than March and below the 240,000 economists anticipated. Meanwhile unemployment rose to 3.9%, according to the Labor Department.
C, a 27 year old, describes her TikTok feed as a mix of economic gloom and wild consumerism. Dave Ramsey TikToks that warn of the evils of debt are followed by influencers showing off their shopping hauls of skin-care products and handbags.
Post after post of negative economic news contribute to “doomerism”—an overwhelming feeling of despair. It’s hard to parse the information shown on TikTok: One minute observers see videos saying the U.S. is on the brink of a recession and then they hear inflation is easing. This happens when your main source of news tells you that no one in your generation will be able to buy a house, food prices are spinning out of control, and credit-card debt is unavoidable—but also that $2,500 Louis Vuitton bags and $70 moisturizers are “a must.”
This has made some young adults thrifty. “I’m not spending my last dollar to keep up with the Joneses,” says T, a 23 year old clothing designer and licensed financial adviser in Staten Island, N.Y. “We have to prepare for what’s to come.” She’s currently living with her mom to save money. C is a 27 year old in Houston. He manages social-media accounts for small, local businesses and moved back home.
“You see a 19-year-old trader on TikTok who only has to work two hours a day and think, “How do I do that?” R says she makes more money now, contributes to a 401(k), pays off her credit card bills each month and puts her annual tax refund into a savings account to help with expenses through the year, however her biggest monthly expense is $2,000 to cover daycare for her two kids.
Rallying stocks, rising wages and a tight labor market suggest the economy is stronger than it has been in years but the youngest, lowest-earning professionals don’t feel that way. That’s partly because a large share are carrying consumer debt, and partly because of what they see on TikTok and other social media. Interviews with finance experts and over a dozen young adults point out the confusion, with a side of gloom. Under 30s are taking on debt as they embrace an old idea: “If the outlook is bad, why not enjoy life now?” S, a financial analyst at an asset-management firm in Nashville, TN, uses a budgeting app and cooks at home to save money—and to be able to afford things she feels she has to buy, like Lululemon leggings. “Between TikTok and your friends, you’re pressured to buy things because you want to fit in,” she says. “That’s always been the case, but with TikTok it’s more prominent.”
Gen Z’s—those born between 1997 and 2012—mixed economic feelings could affect the outcome of this fall's elections but have greater impact on their long-term financial health. Feelings of financial uncertainty can lead to poor choices, like credit-card debt that eats into retirement funds and necessities such as food and housing, says Jacob Channel, senior economist at LendingTree, an online lending marketplace. TikTok has influenced economic decisions large and small, including career choices and buying behavior. Over the past two years, members of Gen Z has effectively doubled their non-mortgage debt, on average taking on an additional $11,000, according to LendingTree.
TikTok influences other big decisions, too. One young woman’s For You page is filled with young entrepreneurs who snub the 9-to-5 job. This inspired her to quit her job as an assistant property manager in late 2022 and take a remote, commission-based job for an internet and cable company. B, a 23 year old mom of two in Houston, likes to buy TikTok-popular baby clothes and other small things for herself, including eyelash extensions, coconut-oil mouthwash and a pumice stone that influencers say reduces stretch marks. “It’s hard not to buy things if they say it’s good for me,” she says.
Many TikTok user feeds become a loop of get-ready-with-me posts, ads, influencer partnerships and videos that encourage them to buy stuff from TikTok’s virtual shop. Some 91% of Gen Z’ers say they have purchased something they saw on social media, according to a survey from Citizens Pay, a buy-now-pay-later service from Citizens.
“There’s an internal pressure among my age range to constantly have these experiences and share them,” says E, a 28 year old lawyer in New York. He posts TikToks about Broadway shows and a Taylor Swift concert he attended. E has several thousand dollars in student debt and says he wants to save more to buy a house, yet adds, “A lot of my paycheck goes toward living expenses, travel and Broadway shows.”
In The Wall Street Journal’s latest quarterly survey of business and academic economists, respondents lowered the chances of a recession within the next year to 29% from 39% in January—the lowest probability since April 2022. Many Gen Z and younger millennials don’t seem able to understand or appreciate that a tight labor market has led to an unusually rapid increase in real wages for younger and lower-wage workers. What’s lacking for them are voices with long-term perspective to put these realities and their habits into clearer perspective. Sound financial guidance can help them imagine an attainable future for themselves and their families. If you know young people who’ve fallen under the financial spell of social media, spark a conversation with them, or bring them with you to meet your Strategic Stewardship advisor.
*Adapted from How Tik-Tok Is Wiring Gen-Z's Money Brain | WSJ by Julie Jargon, Ann-Marie Alcantara: 04May24 Personal Tech section