How much time have you spent on social media today?
The average American spends 2 hours and 22 minutes every day. So it’s not surprising that companies shell out enormous amounts of time and money using social media to sell their products. It’s the perfect portal for them to advertise directly to you, and research suggests that it’s working!
A 2018 study found that social networks like Facebook and Instagram can motivate users to buy impulsively. Further research has found that 49% of millennials aged 23 to 28 admit that social media influenced them to spend money on experiences, like dining out or going on vacation. 48% say they’ve overspent when sharing these experiences with friends.
How does social media encourage us to spend more?
Social media is an outlet of escapism. By following celebrities and influencers, we get a peek into their luxurious lifestyles and we marvel at their lavish spending. Why do we care so much? Well, there is a common but dangerous belief among people that your material possessions define your identity. We also have a natural tendency to compare ourselves to others, a phenomenon psychologists call social comparison. Unfortunately, we focus more on how our friends spend money than how they save it.
On social media, we are bombarded with images of happy-looking people wearing the latest trends and designer styles. They have gorgeous apartments, they go on exotic holidays and they make the rest of us feel like we are missing out (aka FOMO). We feel the pressure to exude a similar lifestyle and “keep up appearances.” But to have that lifestyle, you need to spend money, money that could be put towards more important things. Allowing social media to influence your spending could have a devastating, long-term impact on your finances and leave you with a much bigger problem than a lack-luster Instagram page.
2. Targeted Advertisements
Advertisements on social media are not random. You are being shown a curated collection of products and services that the inscrutable social media algorithm thinks you want. This form of marketing uses tools that analyze your browsing history, track your internet searches and record where you click on a website. These tools attempt to understand your personality, your likes, your dislikes and create a profile that puts you in a certain demographic. It’s important to be aware of this when using social media. If you go to https://www.facebook.com/ds/preferences/ you can learn what influences the ads you see and also manage your ad preferences.
3. Influencer Marketing
Social media is partly built on the enigmatic influencer personalities that rule the social network kingdom. As a fan and a follower, we develop a one-sided relationship with this person (known in fancy science terms as parasocial interaction). They don’t know who we are, but we know who they are and we trust their judgment. When an influencer we respect posts a video recommending a product, it can be tempting to get the credit card out.
We must remember that in many cases, the influencer is being sponsored or paid by a brand to advertise the product. According to the FTC (Federal Trade Commission) influencers must disclose if they have any financial, employment, personal, or family relationship with a brand, so lookout for a #ad or #sponsored in the post. Adults will usually recognize that this is a paid advertisement and will be conscious of that. However, this marketing becomes dangerous when influencers target young children and teenagers, who may not be aware that this they are being advertised to.
If social media is driving you to spend money you don’t have, here are 3 simple ways to avoid temptation.
1. Control what you consume
We are not powerless against the social media marketing gods. We can choose what we consume. If you find that there are accounts you follow that make you feel less than, unfollow or mute them. Instead, follow accounts that offer financial advice, inspiration, and hashtags like #financialfreedom or #moneymotivation (and of course, #heywalt 😉 ). You can also hide ads that you don’t want to see (see screenshot below) to help limit temptation.
2. Track your spending
I know, I know, budgets are a hassle! But if you find that your money is slipping away and you don’t know where it’s going, you have to track your spending. Keep a general account of how much you spend and where you spend it. Are you spending too much on Uber fares? Do you find yourself in the Amazon check-out page a lot? Use budgeting apps like Clarity Money or Mint to make it an easy process. This will help you be honest with yourself about areas where you’re overspending.
3. Keep it real
Remember that social media is not reality. We are never seeing the full story on social media. We are seeing a curated image, a specific side of a person’s life that they choose to share. Keep a healthy dose of skepticism in your mind when scrolling through your social feed. Be real with close friends and family you trust about money and share your saving success stories. In this way, you can inspire others to do the same and start a healthy, realistic conversation about personal finances.