Do you suffer from FOMO? It could be affecting you financially!
The fear of missing out–FOMO–has a big influence on spending in the United States. When you see your friends and family having a great time, spending on travel and eating out, it’s hard to feel good about staying home. On top of that, when you’re invited out for a night of fun, it’s even harder to say no because you’re afraid of the good times you might miss.
Being afraid of missing out on something fun, that FOMO, can cost you big time. In fact, you might decide to spend more than you can afford on a vacation or going out to dinner just because of what you see your friends doing on social media.
Charles Schwab recently completed its 2019 Modern Wealth Survey, and the results indicate that FOMO is weighing on millennial wealth in a big way. Here’s what you need to know.
How FOMO Impacts Millennial Spending
According to the survey, 53% of millennials pay more attention to how their friends spend money versus how they save money.
With more than half of millennials paying more attention to how their friends spend money, it’s easy to get caught up in what you think you should be spending money on. “Keeping up with the Joneses” is still a very big issue when it comes to money, and when you’re paying attention to how others spend their money, rather than looking at how they save, you’re more likely to emulate the spending.
On top of that, Schwab finds that 72% of millennials look at their friends’ social media accounts and wonder how they can afford those expensive experiences. It’s easy to see what your friends are spending on–and then try to find a way to pay for it yourself, so you can have the same experience.
Indeed, 49% of millennials say they were influenced by social media to spend money on experiences. While this number isn’t quite half, that’s still a fairly significant number of people looking at what’s happening in their friends’ feeds and making spending decisions based on FOMO.
Finally, 48% of millennials report spending more money than they could afford in order to participate in experiences with friends. Whether it’s going to a destination wedding or going for dinner drinks every weekend, these types of financial decisions, based in FOMO, can reduce what you set aside for the future and end up leading you into debt.
How to Stop the FOMO and Improve Your Finances
If you want to stop letting FOMO leach away your financial resources, it’s important to change your focus. While there are definitely systemic issues that can make it harder to manage your money, it’s important to take a look at what’s in your control and focus on those items. Here are some steps you can take to move forward if you’ve been experiencing FOMO.
Take a Second Look at the Social Media Feed
As the Schwab survey points out, a significant majority of millennials take a look at social media feeds and wonder how their friends can afford to do all that travel or have those experiences. That healthy skepticism can help you better manage your finances in the future.
Before you assume that your friends can truly afford what they’re doing, take a second look. Consider that your friends are going into debt, using credit cards, to pay for those experiences. Ask yourself if your FOMO is bad enough that you want to be in just as much debt for your own experiences.
Another move is to ignore the social media feeds. Take a break from social media and see if that helps you with your feelings of FOMO. Not being confronted with social media all the time might make a big difference. And when you do come back, you might be better practiced at deciding that it’s nice for your friends, and then moving on.
Create a Financial Plan
Interestingly, the Schwab survey indicates that creating a financial plan can help you develop better money habits–and potentially overcome FOMO.
According to the survey, 78% of those who have a financial plan can pay their bills and save money each month, versus 38% of non-planners. Additionally, planners automate a portion of their income for saving each month at a much higher rate than non-planners.
When you can meet your basic needs and see your net worth growing through saving and investing, it’s a little easier to overcome FOMO. After all, you can see lasting results for the moves you make.
Plus, with a financial plan, it’s easier to visualize what kind of life you’ll have later. By making a financial plan, you can look ahead to when you’ll be able to live your preferred lifestyle. With the help of a financial plan and the practical impact of seeing your savings grow, it’s easier to say no to expensive experiences today.
Enjoy Alternative Experiences
One of the best ways to get past FOMO is to replace some of those expensive experiences with cheaper alternatives.
Talk to your friends about your financial goals and explain that you’re hoping to save. Not only can this help increase understanding, it might also prompt your friends to change some of their own habits.
Rather than going out to dinner on the weekend, consider having a potluck game or movie night at someone’s place. That costs much less, and you can still have a lot of fun together. When you start looking around, and planning staycations or going on camping trips or day trips, you might be surprised to discover how much fun you can have without spending on a big vacation.
Get an Accountability Partner
Part of FOMO is seeing what others are doing and wanting to join in the fun. One way to reduce the FOMO you feel when it comes to spending is to get an accountability partner. Find someone who’s willing to encourage you on your journey–and even join in.
If there are more of you working toward similar goals, cheering each other on and focusing on goals like saving instead of paying attention to spending, pretty soon the FOMO takes on a new meaning. Instead, you end up with FOMO because you don’t have an emergency fund or because you’re carrying a credit card balance.
Even if you have to look online for a community, find a group of people who can help you be accountable when it comes to creating and following a financial plan and making better money choices.
We all feel FOMO sometimes, and it can influence how we spend (or save) our money. There’s nothing wrong with enjoying life and having good experiences. However, in order to have those experiences in a financially healthy way, it’s important to plan ahead for them and save up, rather than putting it on a credit card and getting into debt.
By changing your outlook and adjusting how you think about money–and by paying less attention to your friends’ spending and more to their savings habits–it’s possible to overcome FOMO, improve your finances and set yourself to really live your best life down the road.Topics: Budget