‘FINFLUENCERS’ ARE ON THE RISE:

‘FINFLUENCERS’ ARE ON THE RISE: WHY YOU SHOULD BE WARY OF FINANCIAL ADVICE ON SOCIAL MEDIA

Not all financial advice posts on social media will lead you into a scam, but you need to be able to differentiate between what is in your best interests and what is not, writes VERNON PILLAY

THERE are many conversations to be had around how you manage your money. The problem is that opportunists are everywhere and you should arm yourself with the knowledge of what constitutes good advice.

On social media, some of the information you receive from online forums will be bad, some of it will be good. But, it’s good to remember that having a large following doesn’t equal credibility.

Many investors, whether starting their journey or heading into retirement, fall prey to social media financial advice because they do not have a solid financial plan.

A good, independent financial adviser will explore your unique set of circumstances and implement a long-term investment strategy to help you reach your financial goals.

Everyone can benefit from having an adviser as a partner on their financial journey because, while most people are emotional about their own money, a financial adviser will be rational.

You need to distinguish between a social media influencer and a financial adviser. There are many wonderful lessons that can be provided on social media platforms. Want to learn how to do the latest viral dance moves? That’s the place to do it. Want to see how to prepare some simple and delicious meals? Watch a few videos and have a go.

However, when it comes to your finances, Janine Horn, a financial adviser at Momentum, says even billions of views don’t necessarily equal good advice.

“Social media influencers are a powerful force in today’s economic engine, but there are dangers to seeking financial advice from someone who may not have an understanding of your personal situation, the country you live in, or even the financial challenges that are unique to your life.”

Horn says this is backed up by the fact that a leading social media platform has recently banned its users from advertising financial services in a move to curb scams and poor financial advice.

This is not to say social media can’t prompt younger generations to start thinking critically about their money. “There are good conversations to be had around financial literacy and the promotion of financial responsibility.

The problem is that opportunists are everywhere and consumers should arm themselves with the knowledge of what constitutes good advice,” says Horn.

How should a younger, more digitally-oriented generation attune themselves to the complexities of personal financial management?

Horn says: “Where you are in your life can guide you towards your most important financial goals, to grow your wealth and secure financial freedom. The question is, what are the most suitable financial products in South Africa for your unique needs?”

Horn offers some advice on how young people should approach financial management for different stages of their lives.

STARTING A CAREER

When you’re young, starting out in life and earning a living is exciting. “The sooner you start saving and investing your money, the sooner you get a head start on your journey to financial success. It’s the best time to set up that muchneeded emergency fund so you have a financial safety net, save for your short- and long-term dreams and goals, start a taxfree savings account, and start investing for your retirement to take advantage of compound growth,” advises Horn.

STARTING A FAMILY

Making your family circle bigger costs money. Horn says each family’s journey is different, whether you need to save for your child’s education, or to put money away for a family holiday or a bigger car. You also need to relook your life insurance cover.

“When it comes to your loved ones, you can’t afford to leave anything to chance. It’s time you started looking at the bigger picture, because now, you have more than just yourself to think about. You can’t predict the future, but you can rest easy knowing they’ll be financially secure, no matter what life throws your way,” says Horn.

PLANNING FOR YOUR TOMORROW

Everyone’s journey is unique, but some goals, like a comfortable retirement, are important to everyone.

“The current economic climate has led some people to consider dipping into their retirement funds to access capital. “But that shouldn’t stop you from finding a way to invest for your retirement as early as possible. You’ll be able to take advantage of the time you have as well as the power of compound interest. Your future self will thank you,” says Horn.

GET INFLUENCED BY THE RIGHT ADVICE

Wherever you are on your financial journey to success, Horn says there is plenty of time to make the right decision and do it early enough to ensure your future is secured. “The truth is that it is not easy to always make the right financial decisions, but there are advisers out there who know what they’re doing and can apply their knowledge to your unique situation and goals.”