“FOMA” – the fear of missing out. Everyone else's life looks so perfect; beautiful family, fantastic trip, incredible restaurant, an expensive new car. The reality is that people tend to post a lot more about the positive things in their life. In fact, when’s the last time one of your friends put something on Facebook about the credit card interest they owe each month? One of the negative side-effects of social media is the feeling that you’re not good enough. And what does that make people do? For many, it makes them spend more money to "keep up with the Jones's."
A study that examined social media's impact on American spending habits found that nearly 90 percent of Millennial respondents say social media creates a tendency to compare their wealth or lifestyle to that of their peers. That's compared to 71 percent of those in Generation X and 54 percent of Baby Boomers who say the same. And, as a result, 57 percent of Millennials say they parted with money they hadn’t planned on spending.
And that's not all; social media targets us with ads based on our behavior online. Of course, that’s how they make most of their money. All of Snap's revenue is generated from advertising, which accounted for 99% of the company's total $2.5 billion in 2020. However, that’s just a drop in the bucket compared to what Facebook makes. In 2021, they are projected to generate 94.69 billion in advertising revenue, And most social media platforms now facilitate shopping directly from their website or app. This makes it extremely easy to spend. Many people cited the seamless shopping experience on Instagram and Facebook as a significant trigger for how much they spend via social media.
So, what can be done about it? Should people stop using social media entirely? Well, unfortunately, that's not a realistic option for many of us. However, while it certainly wouldn't hurt to spend a little less time on social media, there are other practical steps we can take so we can still enjoy it without putting a big dent in our wallets each month.
Use social media to strengthen your financial standing. Instead of focusing on what you don’t have, why not join groups or follow financial gurus online who can help you be more intelligent about spending, saving, and investing? For example, Our Money Matters is an online financial platform specifically designed to help you get a financial check-up and then put a customized plan in place that will work for you, and it's free! Follow them on social media at #whyyourmoneymatters.
Create a budget. After using Our Money Matters to gauge where you are financially and where you want to go, use one of their budgeting tools to help you create a realistic plan. Allow for discretionary spending while ensuring that you can pay your bills every month, including paying off your student loans.
Only buy what you love. The biggest problem for many of us is impulse spending. We see something we like online, and we buy it. It's a lot easier to buy from your computer in your living room than to get in your car and go to a store. You get that instant gratification without even leaving the couch. And, of course, that's the problem. So, before you hit the buy button next time, make yourself wait a week or even 30 days to decide if you love it. Save it in your wish list and come back to it after you check your budget and determine if you need it and whether you can afford it.
Use social media primarily as a connection tool. Rather than use it to observe, use it to stay in touch. Also, think about how often and why you’re logging into your accounts can be helpful, and don't feel that everything you see online is the only reality. Remember that you are only seeing the parts of someone's life that they want you to see. Again, no one usually posts about exorbitant their car payments are each month.
In summary, we can all be influenced by others. However, try to follow those who will encourage your best behaviors and not your worst. Find a few minutes each day to focus on your financial health. If you spent 20 minutes a day simply reading a helpful blog post about how to pay off debt or start saving for your future, you would be much better off both mentally and financially.