Are you planning for retirement? You're probably hearing warnings about the hazards, such as market volatility, rising healthcare costs, inflation. But one of the lesser-discussed dangers that could get you financially off track is social media.
In particular, you should beware of social-media-driven FOMO.
For those who have managed to avoid learning about it until now, FOMO stands for Fear Of Missing Out. FOMO usually takes the form of scrolling through an Instagram or Facebook feed – seeing curated photos of friends travelling, going out to fancy dinners, or attending events – followed by immediately feeling a sense of inadequacy from not taking part in enough of these same experiences.
The FOMO inspired by social media has influenced consumers’ spending, saving, and financial habits in ways that will have long-term impacts on their ability to retire. According to a study from Allianz1, millennials in particular are significantly impacted:
- More than half (55%) reported experiencing a fear of missing out.
- 57% spent money they hadn’t planned to because of what they saw on their social media feeds.
- The vast majority (88%) of millennial respondents also believe social media creates more of a tendency to compare one’s lifestyle with others (versus 71% of Gen Xers and 54% of boomers).
- 61% feel inadequate about their own life because of social media.
- Because of FOMO, half also claim they spend more money going out than they do on rent or mortgage.
Here’s how to protect yourself from the misleading, negative impact of social media:
Get a Reality Check Social media posts don’t reveal the reality of people’s lives. Even your responsible friends aren’t going to post about their savings account, the increase in their credit score, or the percentage of their salary that they’re putting into a 401(k).
Regarding your friends who are going out and travelling a lot, you’ll never see posts showing the consequences of those choices. If Instagram had a filter that showed what their lives would look like in ten years, because of their choices today, you may not envy their posts and you may be glad you ‘missed out’ on that future.
Remember What Self-Care Actually Means
Many of these posts aren’t seen as being financially irresponsible because they’re not about buying material things – they’re centered around experiences, not expensive cars or jewelry. Many travel and experience-oriented posts are being framed, especially by influencers, as ‘self-care’. This serves two purposes: (1) relieving the audience of any guilt for craving those same experiences, as they’ve been labeled as ‘self-care’, and (2) actually making you feel guilty for not living life this way by sending the message that you aren’t taking care of yourself if your life doesn’t look Instagram-worthy.
Vacations are important. Taking breaks and having fulfilling experiences is important. Your financial future is important as well. Self-care isn’t one-dimensional: It involves multiple priorities, and financial well-being should be one of them. You don’t have to give up the good times, but you can balance the joy of your current self with the joy of your future self. That is self-care.
Get Ahead of the Impulse
Form a plan with a financial professional. Reconciling your current financial situation with your future goals – including your retirement plans – lets you know how much you should be saving and how much you can allocate for a budget to fulfill your desires, such as to...
Plan a Trip
Yes, this may seem like the opposite of saving, but planning a trip now, within your budget, protects you from the impulse to buy (and perhaps over-spend) later. When you scroll through your friends’ social media posts, you’ll know you have this to look forward to, and you won’t spring for a craving-driven trip that may cost you more than a trip you mindfully planned and budgeted for.
Even when we are constantly surrounded by social media that makes us feel we’re not seizing every moment of every day, we can seize the opportunity to secure our financial futures. You can start by meeting with a financial professional who can help help you set up a plan to save for retirement. Meanwhile, check out our Financial Freedom StudioSM for fundamental information that can help put you on track toward financial security right now.
1. Allianz Life Insurance Company of North America, "Generations Ahead", November, 2017