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The Washington Post (WP) is offering a free money quiz to check if you can spot bad financial advice on TikTok.   I don’t have a TikTok account but some of these posts are shared across social media platforms so I have seen a number of them and were hooked by the clickbait headlines and promises.

With social media taking more and more of users’ personal time and attention, there has been a growing number of financial influencers, or ‘finfluencers’ as WP calls them.  If you search for #money in TikTok, you will see that there are over 15 million posts on this topic alone.  If you add the other hashtags from #creditcard to #MoneyTok, expect to be overwhelmed with millions more.

I decided to take the 8-question survey, and I recommend you do the same (it will only take 1 minute for the quiz and another life-changing 2 minute read for every right or wrong answer).   If you’re not confident in taking the exam for yourself, let me share here the 8 top TikTok advice featured in the quiz.  You have 3 choices for each advice: Go for it, Think twice, and Don’t do this.

Across all 8, WP’s personal finance columnist Michelle Singletary weighed in and only gave the nod to 2, said No to 2, and recommended caution for 4.  Here’s the breakdown with my own take.

#1 Use reward credit cards to save money

This is a Think Twice for WP and I agree.  Reward credit cards are designed to incentivize users to spend more, and no credit card company will offer one where they end up losing money.  To see if the rewards really make sense for you, do the math.  How much is the annual fee? Which rewards are you able to get?  What fees are you paying – from foreign exchange fees to card processing fees?  For example, if you are paying a P12,500 annual fee for a card that gives you free limousine service at airports 2x a year, is that a bargain for you? It was to me at one time, especially when we visited Japan often, as hiring a car to the airport can easily cost P10,000.  With 2 bookings, I already recovered the cost of the annual fee, plus made sure to stack up other available rewards too.  But when travel was curtailed during the pandemic, I cancelled the card right away.

#2 Budget using the envelope system

WP gave this a Go for it, and I also agree.  Any trick that can you make budget and save money is always a good idea.  With this advice, users assign envelopes for certain expenses, from groceries to eating out to gasoline, then put in enough cash to cover it for the month or quarter or year.  When the money is gone, you can’t spend any more. Borrowing from other envelopes is also not allowed.

But WP gave a caveat to the advice which makes sense: no need to share on social media how much cash you have at home and where you are stashing them.  Keep your money where only you know where to find them and can access them.

#3 Buy a house for your baby

I did a double take for this question – and turns out finfluencers do advise that you buy a house for your baby and pay for it over the years so he or she will have one at their legal age.   In the meantime, you can rent it out for additional income, or even sell it at some point and make a “fortune”.

WP says Don’t do it, and I definitely agree. You may end up paying for more mortgage than you can afford (what if you have 3 to 4 kids…) and there is such a thing as downward trends in real estate market.  If you get hit, that’s 2, 3 or 4 times the hit all at one time depending on your number of kids.

This is actually similar to people buying life insurance for their baby.   Your baby is not financially responsible for anyone, so you are better off buying life insurance for yourself and protecting your child should anything happen to you.

#4 You can make a good living without ever leaving home

WP’s answer is Think twice, and I would argue that it can be a Go for it, or Don’t do it, depending on your life stage.  WP gives good advice when it said to “always take precautions with work-from-home schemes that promise big paydays.”  Don’t fall for fraudsters trying to hook you with job offers – do not trust unsolicited text messages sent by unfamiliar numbers.

If you’re starting out, I would recommend a Don’t do it, as having a stable job where you get exposure and learn things they didn’t teach you in school will be a great help for you later in life.  But once you get married, start a family, and have some savings, this could turn into a Go for it. 

#5 Everybody should be their own boss

We would all love to be our own boss, but sadly not everyone is built to be an entrepreneur, so WP says this is a Think twice and I agree.  “There are pros and cons to running your own business. About 20 percent of new businesses fail within two years, 45 percent during the first five years, and 65 percent within 10 years, according to Investopedia,” explained WP, and these numbers should be enough to make you follow their advice, and simply think twice.

#6 Everything is negotiable, from your salary to your rent

Go for it is our common battle cry here, and in my case, I’m not sure if it’s the Pinoy in me who loves a bargain, or the Chinese in me who cannot resist asking for a lower price.  It never hurts to ask, and sometimes it is in the way you ask that can get you the answer you want.  When it comes to rent, you can argue to pay with post-dated checks or to be levied a penalty if you pay late.  These may help your landlord or landlady consider shaving a bit of the rental price.  A longer contract may also help convince them.  As for your salary, hiring managers and bosses are people too.  They will understand that you had to ask, and if you also have a good reason or context to it, you might just get more money added to your paycheck.

#7 Keep all your extra money in a high-yield savings account
 

WP said this is a Think twice, which stumped me because I always feel parking your money where it makes more money makes the best sense.  Turns out their condition is just in case you have credit card debt, or any debt where you are also being charged high interest.  Then it makes more sense to service your debts which may cost you more than any yield you can get from your savings.

#8 Everyone should be investing in cryptocurrency

WP said this is a Don’t do it, and I agree 100%.  While WP recognizes that some have successfully invested in cryptocurrency, “there are also many scams out there, trying to convince people that investing in crypto is the best way to get rich and even build generational wealth. Yes, bitcoin hit an all-time high recently. It’s also has had some spectacular crashes. Investing in crypto is highly speculative and inappropriate for most everyday investors.”

And that’s the key thing here – it’s not for everyday investors, and it’s not for everyone.  For some, but maybe not for you.  So do your homework first before you invest money you need, or even money you don’t have (borrowing to invest is always a bad idea).

* * *

Between the Go for it and Think twice, that’s 6 reasons not to always follow the TikTok finfluencers.  As for the 7^th reason, it’s because personal finance planning is just that – personal.  There is no one-size-fits-all when it comes to growing your money, so taking advice from a social media personality that’s probably doing it for likes and views is generally not a good idea. 

When it comes to money, it can be terrifying to make decisions all by yourself.  So we naturally turn to family and friends, and then to professionals.  You can add finfluencers to this list before you make any choices, but the more informed you are, the more sources you have, the more credentialed they are, the better your money decisions will be.