Is Social Media Robbing You of Your Financial Goals?

Is Social Media Robbing You of Your Financial Goals?

10 September, 2021


Social media comes with many benefits. For one, It helps connect people around the world. And, no matter what you’re interested in, you can find someone who shares your passions. You can also stay in contact with the ones you love most and see what’s happening in their lives.

But, as we know, there are some drawbacks to social media. For starters, people only show you what they want you to see. As a result, they can make their lives look lavish and fancy, leaving you at home, envious of their endeavors. Not only can this result in jealousy and envy, but it can cause you to make irrational money decisions. Like when you see your best friend jet-setting to Bali, does it spark the need to get out your wallet and book the next flight to a tropical destination? Or perhaps, when you see your coworker’s new luxury car, do you want to trade yours in for a new model?

If you answer yes to either question, you’re not alone. In fact, according to Schwab’s 2019 Modern Wealth Index Survey, a third of Americans say social media influences them to spend more money on experiences. Although the burden to keep up with the so-called “Joneses” has been around for decades, social media has turned the idea of FOMO (fear of missing out) up a notch.

The Path from Social Connection to Money Deprivation

So, how is social media actually robbing you of your financial goals? Or worse, how is social media putting you in debt? Well, if you find yourself scrolling through your feed and becoming green with envy, you’re experiencing the impact of FOMO. Essentially, you feel this way because you perceive yourself as part of a group that is doing the same great thing. However, you find yourself excluded for some reason or another. It’s not that you’re not happy for them, but being left out rubs you the wrong way. If you didn’t witness this new car or fancy tropical vacation in the first place, you probably wouldn’t have thought about purchasing either (at least at that time).

Social media conditions you to want to purchase certain things and be a part of something bigger than yourself. Like when you see influencers or celebrities strutting around in a new outfit, living their lavish lifestyle. It yields feelings of envy because it looks amazing to you. Exceeding comfort, glamour, and fun – why wouldn’t you want it?

On top of that, the one-click purchasing feature on social media apps makes it effortless to spend money instantly. But, unfortunately, the rush of instant gratification gives you no time to contemplate the purchase. And, before you know it, you have racked up substantial credit card debt.

But, the truth is, you don’t know others’ financial situations. So, you can’t compare apples to apples. Regardless of what they are buying or the experiences they are indulging in, it shouldn’t have any bearing on you.. Who knows, they could be hundreds of thousands of dollars in debt, and you would never be the wiser. Or maybe they only splurge on vacation and live in an efficiency the rest of the time to save money. You can’t really pull back the curtain on social media, since people are allowed to share thoughts, ideas, and images freely.

It creates an illusion that your network has disposable income pouring in from every direction. In the United States, the average household net-adjusted disposable income per capita is $45,284 a year. This means that most Americans don’t have the funds to spend freely. Between saving, everyday life, and unexpected costs that can arise, most Americans really don’t have the flexibility to buy everything they see on social media.

Tips to Avoid Temptation

If this information leaves you feeling helpless, don’t worry; there are solutions for avoiding temptation. Ideally, you want to achieve a balance between spending and saving, so you can put money toward the items and experiences that bring you joy. So, to avoid the negative influences of social media and work towards a brighter financial future, here are some things you can do.

Decipher needs versus wants. When you first see something you desire, take a moment to pause. Ask yourself if this item or experience is genuinely something you need. Taking a few minutes to reflect will give you time to think about the financial implications of this financial decision. For example, if you see a new pair of sunglasses but you already have 10 pairs in your closet, could this money be better spent elsewhere? Being proactive instead of reactive will help you make better financial decisions when surfing social media.

Allow 48 hours before you buy. Give yourself at least 48 hours before you hit the purchase button. You may discover that you no longer have a need for that item or experience.

Attempt a tech detox. Just like a body detox, cleansing yourself of social media’s ‘toxins’ is often beneficial. To do so, you can take a hiatus from social media for a week or two. While this seems impossible, even taking a little time off can break the cycle. Try to fill the time you would otherwise spend on social media doing other things you love like gardening, talking to a friend, or going for a walk.

Strategies to Enhance Your Spending Behaviors and Habits

Social media isn’t the only spending influence. There are temptations lurking behind every corner. But don’t worry, here are a few strategies you can use to avoid these enticements and truly focus on your financial goals.

Make a budget. The best tip to help you put your right foot forward is to start budgeting. It’s the key to taking control of your spending. Unfortunately, a lot of people become anxious when it comes to planning. But you shouldn’t let nerves keep you from taking care of yourself. Envel makes it easy to minimize anxiety with automated budgeting through Autopilot. That way, the bulk of the burden is off your shoulders since it allocates money for you. So, the only things you have to worry about are how to spend it.

Establish short and long-term goals. A budget is important, but it falls flat if you have no direction. Goal-setting gives you the motivation to continue when things get tough. It’s like going to the gym. Many people struggle to make it part of their routine. But they still do it because they have a weight in mind or want to improve their health. Similarly, creating short and long-term goals will keep you going. When you can afford the things you want, the gratification you feel makes every night spent in or penny saved worth it. Envel offers a Goals feature to make this the simplest part of your day – just set up a goal and let Envel set aside the funds you need to make it come true.

Enlist the help of a challenger bank. Challenger banks are smaller banks that compete with larger financial institutions. They are changing the banking industry by arming their customers with the latest technology and tools they need for a successful financial future. Partnering with a challenger bank gives you the support you need to truly achieve your goals. No longer will you feel alone, as if your bank just wants to use you for your money. Instead, you’ll feel heard and like you are really making progress toward your goals.

Stick to cash. Think about what’s harder: handing over $50 in cash or spending $50 using a credit card? You probably answered the cash. And you’re not the only one who feels that way. According to a 2020 report from the Federal Reserve Bank of San Francisco, consumers tend to use cash for small-value payments. Around 47% of these payments sit under $10. We’re more inclined to save using cash because it’s difficult for us to spend it in large quantities. It doesn’t have the same blinding effect as credit. By relying on cash, you minimize the temptation to splurge or make impulse purchases.

Track your spending. If you’re not careful, it’s easy to fall off of the budget wagon. Tracking your spending ensures that you stay accountable. One of the ways to do that is to monitor your account statements. That will help you break down the patterns in your spending habits. Once you know what that looks like, you can start categorizing. Some may be fixed from month to month, like mortgage payments or utility bills. Others will vary, so you might need more cushion room for them, like food or entertainment.

Try a money challenge.  The internet is all about challenges. So, it’s easy to find money challenges that push you out of your comfort zone towards your goals. One popular version is the 52-Week Savings Challenge, which predates social media. All it asks is that you save anywhere from $1 to $5 per week (something manageable). Even just $5 a week will net you $260 by the end of the year. Or, if that’s too steep, you can try the 365-Day Nickel-Saving Challenge. Basically, you put a stacked $0.05 away each day. So, day 1 is $0.05, day 2 is $0.10, day 3 is $0.15, and so on. It’s all up to you and your savings goals, so explore before deciding.

The Takeaway

Social media itself isn’t a monster. It’s a great tool that’s kept us all connected through good times and bad. But because of that, it’s a bit like a sponge. If you’re feeling insecure about where you stand in life, everything you see seems like a taunt. All your negative self-talk gets thrown back at you in the form of glamorous photos and others’ self-love.

But remember: no one wants to look bad in front of their friends, family, and peers. We all tailor a persona to put out in front of each other. Instead of trying to match that façade, it’s better to create an authentic self you’re proud of being. One of the best ways to do that is through financial stability. Because you know any luxury you buy is well earned, without putting you in the hole.

Envel supports savers through its range of features, including the Envelope System. With no monthly fees or minimum balance, you can budget on your own or with the help of cutting-edge technology. In no time, you’ll reach your goals at your pace.

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