In my previous post I outlined some reasons why I have strong and predominantly negative feelings towards a lot of finfluencers (not all of them!). One of the reasons I didn’t mention was that they are often trying to sell you a very distorted way of managing money. Because I wanted to discuss that issue at length.
To give you a bit of background about myself if you don’t know me: I am not a financial advisor. I am a behavioural scientist with a personal finance specialization. This has both been my education, my research (did a PhD in it) and my current job (work at an Australian bank). I study how people manage and perceive money. And one of the trends I’ve noticed when it comes to ‘finfluencing’ is the emphasis on making managing money ‘fun’. And I don’t like that.
Now let me explain that statement. Obviously, managing your money well is important. And making important things ‘fun’ does tend to help with being able to consistently do them. And consistency is key with actual behavioural change, and good personal finance management. So far so good. If you can make things such as ‘paying yourself first’, saving up for investments, staying within your budgets and all these things fun – power to you! But that’s not the kind of fun finfluencers are gunning for.
The kind of ‘fun’ finfluencers want to get you into mainly takes the form of very active investing, and investing in things that are highly speculative in nature. Obviously volatile assets such as crypto are much more interesting than investing in mutual funds or ETFs. The latter only changes slowly and has a reputation for being steady. The former has been likened to gambling. Which one do you think is more fun?
So on and on the finfluencers go about niche crypto currencies that are about to go ‘apeshit’ and that you need to invest into now. Ignoring the fact that half of those are ‘pump and dump’ schemes that only the finfluencer is going to make a profit on…
Real investing looks nothing like this. And if you want to be really accurate about your terminology (and I am a stickler for a good definition), this type of highly volatile asset betting is known as speculating. Not investing.
Investing can be equally high risk, depending on how it’s done, but those risks are calculated and the decision to partake is often much more informed. Investing is also often for the much longer term, which is why ETFs and mutual funds are so popular, as they tend to produce good growth results in the long term, with relatively little risk as the risks tend to be diversified.
The idea of investing being fun and almost game like, is a trend that a lot of finfluencers have jumped on, but not a trend they initiated. Online, and predominantly mobile, trading platforms, such as Robinhood have initiated this trend, by gamifying the trading experience. It is not the holding of assets, the emotion management, the longer term perspective taking or the calculated risk that gets rewarded through clever UX, positive feedback, bonus points and streaks, it’s the activity of trading itself, whether it’s against a profit, or a loss. This shifts the process of investing to become much more activity focused rather than outcome focused. Naïve investors now become dopamine chasers, trying to uphold their trading streak, and get that ‘reward’ from placing another trade, rather than the actual reward, likely months if not years down the line of holding the asset to actual make a proper profit.
This is not a coincidence or unfortunate accident. This UX is a dark pattern, or a sludge if you will. A lot of these trading apps do not charge for the trades themselves like a lot of banks and other official institutions (such as BlackRock) do. No the trades are free (increasing their appeal), because these apps sell on your data, specifically your order flow. Most orders (trades proposed to the app) aren’t instantaneous – they have a lag to them. Within this timeframe the app, who owns the data, can sell these expected orders to quick traders, who can trade on these expected trades (they know for which stocks demand is falling/increasing). The more trades there are, the more data there is to sell. So these apps have an incentive to make you trade more, regardless of whether this is good for you as an individual (it often isn’t). This is a business model. You are not the consumer here. You are the product.
Suddenly it’s fun no more.
Another core part of the ‘finfluencer fun experience’ is the quitting your 9-5 and doing something risky and outrageous instead. This may sound like I’m shitting on entrepreneurship, but I’m not. I have a lot of respect for people with an entrepreneurial spirit (I utterly lack one myself) - but can we please not forget about the statistic of most businesses failing?
The tack that most finfluencers go on is that all 9-5s suck (blatant generalization), you’re trading your time to make someone else wealthier (technically true, but without any nuance) and you should be spending that time to make yourself wealthier, preferably doing something you love. So f*** your boss and be your own boss today!
Obviously, the idea of spending the same amount of time and effort yet somehow making a lot more money, doing what you love, never ‘working another day in your life’ because you’re so passionate about what you do now etc. sounds ideal. And it would be ideal, if that was the full coin. But it’s only one side of the coin. Again, we’re focusing a lot on the gain, and not on the risk. Because entrepreneurship is risky.
When push comes to shove a lot of finfluencers try to put the FUN back into finance; whether that’s recommending you to follow your passions, leave your 9-5 or become an independent quick trader. As I said in my previous post, be wary of strangers on the internet…
When I was growing up, gambling was always seen as a bit of a taboo in my family. But as I got older and started exploring the casino world, I realized it can be a great way to unwind—if done responsibly. That’s the key, right? Responsible gambling. I can’t count the number of times I’ve reminded myself that gambling should be about entertainment, not desperation. Take, for instance, a site I recently came across, https://bonus-sem-deposito-cassino.com/. They offer some incredible no-deposit bonuses that are perfect for those looking to test the waters without risking too much. But even with these perks, I always set a firm budget before diving in. I treat it like a night out: money spent on fun…
Now let me explain that statement. Obviously, managing your money well is important. And making important things ‘fun’ does tend to help with being able to consistently do them. And consistency is key with actual behavioural change, and good personal finance management. So far so good. If you can make things such as ‘paying yourself first’, saving up for investments, staying within your budgets and all these things fun – power to you! But that’s not the kind of fun finfluencers are gunning for.
As a teenager, I played Monopoly quite often and it was fun. Now I am 27 years old and I am an experienced gambler. At the moment, I love playing on the Duck dice site and it helps me earn cryptocurrency. I can say that fun and finances can be successfully combined in gambling if you correctly approach the gambling process and follow some rules.