Social Media May Be Draining Your Finances, Survey Shows

Millennials, Gen Z most likely to be influenced by the financial habits of their online friends
friends looking thru their social media accounts

Anyone who has ever spent an hour scrolling through an Instagram feed knows that social media can suck up a lot of your time. But a new survey suggests it can suck up your money too.

Americans aren’t just using social media to argue about politics or share their latest photos with friends; many are also discovering new ideas for spending money. Investment firm Charles Schwab surveyed 1,000 adults for its 2019 Modern Wealth Index Survey to get their thoughts on saving, spending and investing. They found that social media plays a large role in how many consumers manage their finances from day to day.

More than a third of respondents—34%—said they were influenced by social media to spend money on experiences. The percentage was even higher among young adults, with 49% of millennials and 44% of Gen Zers saying their buying decisions were influenced by the digital platforms.

While some savvy marketers are hawking their products on social media, consumers aren’t just paying attention to company ads. Rather, many are interested in how their online friends are living and spending money. When they go online and see pictures posted of friends posing in expensive clothing, eating in upscale restaurants and sightseeing while on vacation, many find themselves tempted to spend more as well.

Unfortunately, it goes beyond temptation for some of the survey’s respondents. More than one-third (35%) said they have spent more than they can afford in order to participate in experiences that were inspired by social media.

Younger adults were the most likely to overspend, with 48% of millennials and 41% of Generation Z admitting to buying things they could not afford because of something they saw on a social media feed.

Yet the survey results also suggested that many are aware social media posts don’t show someone’s complete financial picture. More than half of respondents (57%) admitted to paying more attention on social media to how their friends spend money than to how they save. Members of Generation Z were most likely to focus on spending rather than saving, with 61% admitting to be more interested in their friends’ spending habits.

Similarly, nearly three-fourths (74%) of Generation Z and 72% of millennials wondered how friends could afford some of the experiences they posted about online.

When it comes to social media, it’s important to recognize that people only show what they want you to see. While someone may share photos of a lavish dinner, they might not post a picture of their latest credit card bill with an unpaid balance. And unneeded spending due to a “fear of missing out” is a well-known danger of following social media.

Rather than buying something on a whim after perusing Instagram or Facebook, try to stick to budget based on your income and financial goals. If you continue to find yourself tempted to spend more money when you use social media, consider taking a break from the platforms or hiding certain posters from your feed. You could profit by it.

Tamara E. Holmes

Tamara E. Holmes is a Washington, DC-based writer who covers personal finance, entrepreneurship and careers.

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