Young people use cell phones.

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Gen Z women are driving spending trends on TikTok.

Women in their 20s spend more time on the short-video app than male peers of their generation, putting them at financial risk.

“TikTok is an app aimed at Gen Z women and sets the tone and narrative for what’s ‘hot’ online,” said Ellyn Briggs, brand analyst at Morning Consult.

The problem: More time on the app leads to a stronger connection with influencers, online personalities who create sophisticated content that resonates with their viewers.

Here’s a look at other coverage in CNBC’s Women & Wealth special report, where we examine ways women can increase their income, save and make the most of their opportunities.

Many influencers post “haul” videos that feature products they recently purchased, often from a specific brand. Your ability to spend money can be misleading, experts say. Although influencers are often in the same age group as their target audience, many earn high incomes or receive free products from their platforms and brand offerings.

“The bigger conversation is about how our digital lives impact our real lives,” Briggs said. “TikTok is driving consumer behavior in very real ways.”

TikTok has a significant impact on how the younger generation spends their money: #TikTokmademebuyit received more than eight billion views in February, according to Morning Consult. According to a separate report from Morning Consult, a larger share of Gen Z women (75%) use TikTok than their male counterparts (62%).

Social media is Generation Z’s way of “keeping up with the Joneses”

In some ways, 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 at Denver-based Paragon Capital Management. The company 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 perceived shopping habits of their socioeconomic peers in their neighborhood, Williams said.

Avoid credit card debt. It’s much easier to get started on the other things if you don’t start at a dead end.

Sophia Bera Daigle

certified financial planner

Social media platforms like TikTok take the concept to another level, especially for Generation Z. It’s easy to become overwhelmed by FOMO, or the fear of missing out, despite economic constraints like the high cost of living.

According to LendingTree, Generation Z’s non-mortgage debt increased by 99.3% between March 2021 and the first quarter of 2023. Younger consumers’ debt averaged $10,797. The age group’s personal loan balances and credit card balances skyrocketed, increasing by $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, CFP and founder of Gen Y Planning in Austin, Texas.

“It’s so much easier to start doing the other things when you don’t start in a hole,” said Daigle, 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 as they observe their contemporaries living expensive lifestyles:

1. Signs of wealth can be misleading

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

“When you see signs of wealth, it’s not someone rich: it’s spent, it’s gone,” Williams said.

Additionally, you have no way of knowing how people afford their lifestyles online.

Influencers on TikTok, Instagram and other platforms may be sponsored by private companies to encourage others to purchase the products or experiences. “They don’t always spend their own money” on the items they promote, Williams said, regardless of how they fund the rest of their lifestyle.

2. Think about your long-term plans

Women can find it more difficult to get ahead financially due to hurdles such as the wage gap. According to the National Partnership for Women and Families, in 2022, women earned 78 cents for every dollar men earned.

While social media can tempt people to spend beyond their means, it may help you remember more impactful ways to use that money, whether by investing in a retirement account or building Emergency savings or preparing for other goals, Daigle said.

“It’s wonderful to lay the foundation in your 20s so that you can actually achieve your financial goals by the time you’re 30,” she said.

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