How Our Favorite Social Media Platforms May be Threatening our Financial Security
When we think about threats to our budget, things like rent, credit card bills, and student loans come to mind. However, we may need to add social media to the list. According to new research, your social media accounts are likely tempting you to spend more money – and they could be contributing to unwise spending habits.
According to The Modern Wealth Survey put out by Charles Schwab, Americans rank social media as their worst influence when it comes to managing their money. According to Rob Williams, vice president of financial planning for the Schwab Center for Financial Research, this is because “the pressure to ‘keep up with the Joneses’ is now more heightened than ever due to social media.”
Dr. Robi Ludwig, a psychotherapist and author based in New York, explains this concept further saying, “We are looking at our phones, constantly scrolling through social media, and it’s evolved into an online mall. We receive regular ads based on what we like and shop for. If you see something often enough, it turns into a feeling of ‘Oh, I should get this.’”
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The Journey from ‘FOMO’ to Debt
Do you suffer from the Fear of Missing Out (FOMO)? Here’s one way to tell: Do you ever find yourself scrolling through social media and getting jealous of your friend’s new car or tropical vacation? If so, you’re experiencing the effects of FOMO – and the statistics say you’re not alone. The above-mentioned survey reported that a third of Americans say they’re influenced by social media to spend money. This pressure to spend is especially strong among Millennials – just under half, 49%, say social media has specifically influenced them to spend money on experiences.
Alia Dudum, a Millennial money expert at LendingClub, a peer-to-peer lending company, explains that this trend is driven “by the feeling that it’s worth buying more than you otherwise would, or buying something you wouldn’t normally want because others are doing it.” Social media conditions you to want what you don’t have, like that latest outfit or phone, making it difficult not to spend when you’re inundated with posts of celebrities and friends alike showing off lavish lifestyles or a recent major purchase. To make matters worse, features like the one-click purchasing have made it easier than ever before to spend money.
With so much working against you, is it possible to lessen the influence social media has on your spending? The answer is yes, and it begins with strengthening your relationship with money. Ultimately, avoiding negative social media influence on your finances is about balancing your spending and saving so that you can have the best of both worlds while working towards long-term financial security.
Though it may seem easier said than done, take some time to breathe and reflect on whether or not you need something before purchasing something online. Giving yourself time to think about the broader financial implications of your purchase can be a great way to rein in impulsive spending, and it can be as simple as reminding yourself to breathe and count to ten before clicking that purchase link.
Here’s something else to try, too: The next time you have the urge to buy something you see while scrolling, force yourself to keep the item in your cart for 48 hours. If you forget about it during that time, chances are you probably didn’t need it. If you’re still finding it difficult to disengage from your social media-induced spending, you can also try a “tech cleanse” and stop checking social media for a week or two. This can be difficult, but you can take steps to make it easier, such as removing social media apps from your phone for the length of your cleanse.
Strategies to Improve Your Spending Habits
Of course, there is much more to developing good spending habits than simply stopping social media impulse buys. So, if you’re looking to tackle your overall spending habits, use these tips to get started:
- Make a budget. The key to smart money habits is setting a monthly budget and sticking to it. Achieving a successful financial future requires the building of a strong financial foundation from which you can build upon. Try a budget app like Mint or Wally to help you get started and stay on track.
- Set goals. Setting achievable financial goals can help you feel confident purchasing something without the stress of ruining your long-term financial security. Create a financial plan that is in line with your budget, making sure you include your goals and current financial situation.
- Seek help. A financial advisor can provide the guidance and resources you need to make a plan that works for your unique situation and future goals. If you’d like help establishing a financial plan that can make your long-term goals a reality, give us a call today.
Many people struggle with keeping spending on track. If you fall into this category, it’s important to know that social media probably isn’t doing you any favors when it comes to your finances. It serves as a constant reminder of all the things that you don’t have, and targeted ads within social media apps make one-click purchasing easy. The best way to tackle FOMO-inspired spending is to find the right balance between spending money on goodies and investing in your future financial goals. Use the tips above to guard against social media leading to unwise spending decisions, and make a plan to achieve your overall financial goals.