TikTok is driving spending for women in their 20s

Young people using cellphones.

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Gen Z women are driving spending trends on TikTok.

Women in their 20s spend more time on the short-form video app than male peers of their generation, and it’s exposing them to a financial risk.

“TikTok is a Gen Z women-centric app, and it is setting the tone and the narrative for what is ‘hot’ online,” said Ellyn Briggs, a brands analyst at Morning Consult.

The issue: More time on the app drives increased connection to influencers, online figures who create aspirational content that resonates with their viewers.

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Many influencers post “haul” videos showing products they recently purchased, often from a specific brand. Their ability to spend can be misleading, experts say. Although the influencers are often within the same age group as their audience, many earn a high income from their platforms and brand deals or receive free products.

“The bigger conversation is just how impactful our digital lives are on our real lives,” said Briggs. “TikTok is driving consumption patterns in a very real way.”

TikTok has significant influence on how the young generation spends its money, with #TikTokmademebuyit garnering more than eight billion views, Morning Consult found in February. A larger share of Gen Z women, 75%, use TikTok compared to their male counterparts, 62%, a separate Morning Consult report found.

Social media is Gen Z’s ‘keeping up with the Joneses’

In a way, social media is “the current, younger generation’s version of keeping up with the Joneses,” said certified financial planner Shaun Williams, partner and private wealth advisor of Paragon Capital Management based in Denver. The firm is ranked No. 57 on the 2023 CNBC FA 100 list.

Baby boomers were able to keep up with “the Joneses” because the generation often primarily saw shopping habits from socioeconomic peers in their neighborhood, Williams said. 

Stay out of credit card debt. It’s so much easier to get started on the other things if you’re not starting in a hole.

Sophia Bera Daigle

certified financial planner

Social media platforms such as TikTok take the concept to a different level, especially for Gen Z. It’s easy to be overpowered by FOMO, or the fear of missing out, despite economic pressures such as a high cost of living.

Nonmortgage debt among Gen Zers rose 99.3% between March 2021 and the first quarter of 2023, according to LendingTree. Younger consumers’ debt added up to an average of $10,797. The age group’s balances spiked for personal loans and credit card balances, rising $1,292 and $1,771, respectively.

The site analyzed more than 150,000 anonymized credit reports from the first quarter of 2023 and 87,000 from March 2021.

The best thing someone in their 20s can do for themselves is to “stay out of credit card debt,” said Sophia Bera Daigle, a CFP and the founder of Gen Y Planning in Austin, Texas.

“It’s so much easier to get started on the other things if you’re not starting in a hole,” Daigle said, who is a member of the CNBC FA Council.

Two money guardrails for women in their 20s

Experts say it’s important for young women in their 20s to remember the following two things when it comes to observing their contemporaries exhibiting expensive lifestyles:

1. Signs of wealth can be misleading

Someone who shows their wealth in what they own or wear only shows you what they spent, not what they have invested or saved.

“When you see signs of wealth, that is not someone who’s wealthy: It’s spent, it’s gone,” said Williams.

Additionally, you have no way of knowing how people on the internet are affording their lifestyles.

Influencers on TikTok, Instagram and other platforms may be sponsored by private companies to get others to buy into the products or experiences. “They’re not actually always spending their own money” on the items they promote, Williams said, no matter how they finance the rest of their lifestyle.

2. Think of your long-term plans

Women can have a tougher time getting ahead financially because of hurdles such as the wage gap. In 2022, women earned 78 cents for every dollar men made, according to the National Partnership for Women and Families.

While social media can entice people to spend beyond their means, you might find that it helps to remind yourself of more powerful ways to use that money, whether that is investing in a retirement account, building emergency savings or preparing for other goals, Daigle said.

“Laying the groundwork in your 20s is wonderful so that in your 30s, you can really turbocharge your financial goals,” she said.

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