Why Keeping Up With Your Friends on Social Media Can Cost You
Have you ever wondered how your friends can afford ALL of those trips and restaurant excursions they share on social media? There’s a good chance, they can’t.
According to Schwab’s Modern Wealth Survey, more than a third of Americans admit they’ve made a purchase simply because of their friends on social media. The study asked 1,000 Americans their thoughts on saving, spending and investing. Many of the respondents outright blame social media platforms — not their friends, as being the worst influence when it comes to money management. They also ranked their friends and family members among the “good” influences — at least in money matters.
However, three out of five people surveyed admitted to paying more attention to their friends’ spending, while ignoring how they may (or may not) be saving their money. And yes, like a lot of us, those surveyed often wondered how their friends were coming up with the cash to pay for all of the expensive vacations and dining they post about on social media. According to the survey, it’s possible that they can’t actually afford all of the experiences they share and are spending money they don’t have… essentially going into debt for the ‘gram.
Believe it or not, it isn’t just millennials who are affected by FOMO (“fear of missing out”) when it comes to social media. It’s also those in the generation Z age group. While 49 percent of the millennials participating in the survey admitted to being influenced by social media to spend on experiences, 44 percent of generation Z-ers admitted to the same. Further, 48 percent of millennials and 41 percent of those part of generation Z admitted to spending money they don’t have just to hang with their peers.
“The burden to ‘keep up with the Joneses’ has been part of our culture for decades, but it appears that social media and the fear of missing out (FOMO) have increased the pressure to spend,” said Terri Kallsen, executive vice president and head of Schwab Investor Services said in Schwab’s press release. “Spending is not the enemy, but when we allow social pressure or other forces to lure us into spending beyond our means, it can impact long-term financial stability and become a larger problem.”
What might be a more shocking result of the survey was the answer to what respondents would do with a $1 million windfall. Most said they’d buy a house, cars and travel, while some said they’d pay down debt. However, only 21 percent of those surveyed mentioned saving any of it—with gen Z-ers (37 percent) being the most likely to say they’d save any of it.
Health-wise, the idea that social media use could be harmful isn’t much of a surprise. In fact, a study published in Guilford Press just last year suggested that stepping away from social media could decrease depression and loneliness.
It turns out that spending our time on social media platforms isn’t just bad for our health—it’s also harmful to our wallets.