Many people think social media is just a way to connect with friends and family—they don’t think that it has anything to do with their spending habits. However, considering the number of social media ads we are typically encounter, it’s no surprise that it can affect our financial wellbeing. Here, we’ll look at some of the ways social media can impact financial decisions and how to avoid the pitfalls of social media-induced spending.
How Social Media Can Encourage Spending
Social media has become a great platform for retailers. RichRelevance, an e-commerce group, studied shopping sessions on retail sites and found that consumers who visit a retail site from Pinterest spend more than people who were directed to the retail site via Facebook or Twitter. While sites like Pinterest seem harmless, the never-ending stream of clothes, jewelry, luxury vacation destinations, and expensive interior décor can easily influence people to spend more than they intend.
In such a technology-driven world, young people, in particular, can’t help but compare their quality of life to what they see their peers posting on social media. Unrealistic comparisons create several problems. Comparing your life to someone else’s can cause deeper emotional issues that people may not notice a first. It is also easy to forget that social media allows people to post the best version of themselves, and to create an image that doesn’t reflect reality.
How Influential Advertising Increases Spending
Social media platforms have become one of the best places to advertise products and services. While there are ways to turn off ads if you realize that they cause you to spend more, you will find that some ads pop up anyway. Sites like Facebook store and sell your personal data to advertisers, which is how they can present ads that are more relevant to your interests, as expressed by your online actions.
So if you like a company’s page on Facebook, you may see an ad for a similar company’s products later. That’s not a coincidence. The ad is a strategic way of reminding you of something you liked, and seeing that ad can easily persuade you to buy something even if you had not originally planned a purchase.
Social media influence extends beyond ads. When your best friend raves about a new ice cream parlor, you’ll be more inclined to give it a try yourself, whereas without that personal review, you may not have purchased ice cream at all. It’s human nature to want to feel included, and many people admit to spending more than they should, just so they don’t miss out on activities their friends and family are enjoying.
Lots of social media users fail to post about the more humdrum aspects of life that aren’t so glamourous. Realistically, if people were more comfortable with posting what’s actually going on in their daily lives, others might feel less inclined to spend money they don’t have to “keep up with the Joneses.”
Fear of Missing Out (FOMO)
This fear of missing out, or FOMO, is one of the biggest influences on online spending. Thanks to social media, it’s easy to see people post fancy dinners and extravagant vacations at any time of the day or night. Since many people use social media to keep up with people they actually know, comparison often creeps in to create feelings of inadequacy when it appears someone else is living a fabulous life.
The concept of FOMO is usually seen as something that only affects millennials and Gen Z because they are heavy social media users, but it has the power to affect people of all ages. However, FOMO-induced spending is probably a larger problem for these younger generations, because they have less disposable wealth to spend than older generations, on average.
How to Avoid FOMO Spending
Social media is great for several reasons, but don’t let comparison and envy entice you to spend more than you should. You can prevent overspending by remaining mindful of your financial goals, sticking to a budget, and learning your spending triggers.
Avoiding FOMO spending is all about remembering what works for you, your life, and your financial situation—not what will look good online. The first step is to become aware of your triggers. When you see someone’s trip to Dubai and feel jealous, or like you suddenly need to book a trip there too, make a mental note. You can even say “This makes me feel jealous.” Putting a name on an emotion or feeling is a good way to acknowledge it, without letting it rule you. Over time, you’ll become more aware of your FOMO spending triggers.
If you realize that a particular friend or influencer on a social media platform always makes you feel jealous, why not unfollow them? It’s also OK to take a break from social media altogether. You may find that you’re not so tempted to buy things you don’t need—and you may even find you have lots more time to pursue hobbies or have fun with your friends and family. Give it a try and see how it makes you feel!