by Natalie Weed
Yes, social media has managed to affect financial literacy too, as it does with everything else.
Turns out the lucky ones who actually get a proper "money talk" from their parents aren't the only ones with access to financial education these days. Thank god.
The good news:
Luckily things have changed as we round the corner into the first quarter of the 21st century and financial education is widely more accessible than it once was. And even better, teens are actually more interested to learn than they once were because of the attention investing has gotten on social media — maybe you've heard of the GameStop scandal of 2021... regardless, we'll come back to that.
And the *inevitable* bad:
Only 43% of kids report having a "money talk" with their parents, and financial education in school is a lack-luster as most of us who are attending or attended high school in the U.S. know all too well; only 47% of Teens report having any financial lessons in high school (Wells Fargo & Company Survey, 2021).
What about the parents who don't give the "money talk", or teach their kids about financial literacy in a far more indirect way such as setting up savings and investment accounts for them? Well, they wish they, themselves, had received the proper financial education themselves in their own adolescence!
89% of parents wish that they were given investment education while growing up.
Quick math: 89%-43% is 46%.
That means 46% of parents who wish they had investment education of their own chose not to have a "money talk" with their child!
So where do they expect this education to come from? School — and hey, I agree! But good luck with that one. In our modern day schooling system, it's far more likely for teens to learn from online social media, websites and articles where a combined 69% of teens receive financial education.
Yet parents are skeptical of this as they are with most things on the internet and social media. Only 12% of parents believe their child has gained financial literacy through online media.
Parents wonder: why would teens turn to social media for financial literacy when they could do literally anything else on it that is far more entertaining for them?
I would argue, and you may too, that parents are largely underestimating teens interest in personal finance and investing. 93% of teens believe they will be better-off financially later in life if learn about investing now.
Not only that, but 75% of teens report being ready to learn about "investing now." No wonder they are turning towards other resources when shut down by parents and underwhelmed by the school's education system!
Ok, I'll cut parents some slack. Although they are having conversations about finance at 61%, only a mere 32% report bringing up investing in these talks. Let's remember that forgetting a difference of 43% of teens who want to learn about investing, but aren't so lucky to have a parental guidance on the subject. So where do they turn? The obvious solution for most of us Gen Zs — social media.
Game Stop "Short Squeeze" Scandal
So perhaps teens are turning to social media when they are unfulfilled by parental and school financial education, or perhaps they are already on social media and come across a scandal, making a selection of Reddit community members millionaires and their attention has been peaked. Both are plausible speculations.
A quick debrief of the situation for those who didn't follow in early 2021 and were instead concerned with the actual pandemic ravaging the world. *highly sarcastic*
GameStop had an extremely low stock value in January 2021. Amateur traders on Reddit known infamously as "Wallstreetbets" conspired to buy huge amounts of GameStop (GME) stock and not sell it, in order to rise the valuation but also just manipulate the stock market. What this would create: so few GME stocks that short-selling investors who needed to buy back their stock ultimately... just couldn't. And a quick review of your economics lesson: scarcity in quantity and high demand causes price to rise.
As short-selling investors couldn't find stocks to purchase, they began losing money, and the value of GME stock skyrocketed to over $500 USD per share and hence the name "short squeeze" was cleverly born. Just kidding, this, although uncommon, has happened before, but never so publicly on social media.
And there's nothing like a headline like this one to get the attention of teens active on social media. We love getting rich through social media through doing the least possible thing — what can I say? It's the Gen Z way.
The stats really say it the best, Wells Fargo release of the survey reported "Almost half (45%) of teens said they were more interested in investing this year because of the GameStop social media situation (53% vs. 40% teen girls)".