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9 Simple Ways Social Media is Killing Your Finances

9 Simple Ways Social Media is Killing Your Finances

Social media comes standard in our lives in the 21st century. Over 4 billion people are registered for a Facebook account alone with over 2 billion of them using their accounts every month. Social media is not only for consumers anymore. Businesses have the ability to reach billions of people daily across many social media platforms, making it a great tool to reach the masses.

As a consumer, this can cause problems for your finances. Being constantly bombarded with marketing messages as you scroll through your feed can make spending money an impulsive routine. And with the rise of influencer marketing, you might even see your favorite celebrity telling you you need to purchase a product or service making it that much more enticing.

Keep reading to learn 9 simple ways social media might be hurting your finances and what you can do to keep them in check.

1. Marketing can cause you to spend money

One of the top reasons social media can hurt your finances is because of the marketing messages forced down your throat. These messages are targeted down to your income, website behavior, and many other demographics. According to CNBC, almost half of millennials claim social media made them spend money they don’t have.

For example, if you visit a specific website, you might see ads for that product across the web and on social media, making it simple to return and purchase it.

How to Avoid it:

While it’s impossible to avoid marketing on social media 100%, there are a few things you can do to limit your exposure.

1. Turn off Cookies / Use a Private Browser.

Many websites use cookies to track your activity on their website and use that information in the future to advertise to you amount other things. By using a private browser, you will limit the tracking capabilities and therefore you will see less advertising based on your previous behaviors.

2. Unfollow Companies or Brands

You can avoid marketing from our favorite companies or brands by unfollowing them on social media. This will prevent you from seeing their organic messages but not necessarily advertising.

Note: If you do not turn off cookies or use a private browsing window, the company may still target you with ads!

3. Limit Exposure

By limiting exposure to social media altogether, you will decrease the number of ads seen. (More on this below!)

2. Keeping up with the Joneses

As you scroll through your social media feeds, you’ll often see friends or acquaintances posting images, videos, or text about their lavish vacations or luxurious lifestyle. The psychology behind this can lead to inopportune spending and poor decision making. As your friends are purchasing new cars, clothes, or other material items, you might be tempted to do the same.

How to Avoid it:

You can avoid the feeling of keeping up with the Joneses by understanding the reality of their lifestyle. On the outside, they might seem as if they have their finances together, but oftentimes they will be drowning in debt. Whenever you get the urge to keep up with others, take a step back and look at your own finances and how they have improved. This will discourage poor spending habits.

3. Social media kills productivity

Whenever you scroll through social media, you might be losing out on productivity. Like anything we do, there is an opportunity cost of performing that activity. If you could be making some sort of income instead of being on social media, that is your opportunity cost.

It doesn’t need to be something as straightforward as working on your side hustle or earning money. Maybe you put off working on your weekly budget, planning your meals, or spending valuable time with friends or family.

We might think a few minutes here and there on social media is harmless but it can quickly add up. If you spend 30 minutes per day on social media, you would have an additional 3.5 hours of free time per week. 30 minutes is relatively low for the average millennial. In 2018, the average time spent on social media daily was 144 minutes or 16.8 hours per week.

How to Avoid it:

Avoid decreased productivity that social media can provide by setting limits for yourself. It might mean setting a timer on your phone in which you allow for a certain amount of time on social media or you could even consider setting daily limits in which social media apps will not be accessible after your daily limit is reached. Both ways can help you to limit the amount of time you throw away on social media.

Note: Social media is not always bad! Some people make a living using social media. If this is the case for you, you might want to consider spending MORE time on social media.

4. There’s probably an underlying reason you’re on social media

Social media has become a way for people to escape from the world and live vicariously online. A study by NBCI found that people on social media are 2.7 times more likely to be depressed. These people of ever more susceptible to the financial destruction that social media can cause. Depression can cause you to spend money on things you don’t necessarily need in hopes of making yourself feel happier. Moreover, 66% of compulsive shoppers have had a history of depression or anxiety.

How to Avoid it:

To avoid unnecessary spending, make sure your mental health is in check. Consider visiting a psychologist or therapist to help you with your mental health and always dedicate time to ensure a positive and healthy mind.

5. FOMO

The classic fear of missing out can cause you to spend money you wouldn’t otherwise spend. 2020 is the year of influencer marketing in which celebrities are paid to promote a companies product. These posts can go viral with millions of people exposed to the product.

One of the most famous examples of influencer marketing was the 2017 Fyre Fest in which hundreds of celebrities were paid millions to promote a music festival to millennials. The festival sold out almost instantly. Because of the rapid widespread promotion, millennials did not want to miss out on the experience and purchased tickets.

How to Avoid it:

Avoiding FOMO can be difficult because it is more about psychology than anything else. To help avoid the negativity that comes with FOMO, you should try a few things:

  • Think about what you gain from not doing what you’re “missing”
  • Know that you cannot do everything, all of the time
  • Join in on special occasions

6. Paid Subscriptions

Some social media or publishing companies charge a price to access their platform. Medium, for example, charges $5 per month to view content on their website.

How to Avoid it:

This one is perhaps the easiest to eliminate: cancel your subscription.

7. Spending From the Web to In-Store

Even if you don’t end up spending your money online, digital advertising can affect your non-digital spending. All of those Starbucks ads you’ve seen over the years online might make it that much more tempting to pull in the drive-thru to pick up your next morning coffee.

Omni-channel advertising strategies (those with mixed messaging across various digital and physical platforms) can drive an 80% higher rate of incremental store visits for businesses.

How to Avoid it:

The best way to avoid digital ads is to limit your exposure by decreasing your time spent on social media.

8. Ease of Spending

Shopping in the digital age has become a breeze. Drop an item in your virtual cart, have your personal info passed through electronically, and checkout with your credit card automatically filled in. This is a much simpler process than getting in your car, spending 20 minutes commuting to the mall, using your own gas, wading through people, avoiding bad weather, and everything else that comes with a normal trip to the mall or your favorite retailer. Social media has made it so simple to purchase products through their interfaces, causing you to spend more money.

How to Avoid it:

Cut your digital spending by making it difficult for yourself to complete your purchase. Remove any auto-fill components you have set up like your credit billing info or your address causing you to complete this step each time you hit the “checkout” button.

9. Poor investing advice

You’ve probably seen some of the get rich quick schemes floating around on social media. These schemes and other poor investment advice can wreak havoc on your finances and causing you to waste your money that could be used elsewhere.

How to Avoid it:

Don’t fall for the trap! These get rich quick schemes have changed over the years to become less identifiable. Even if the source doesn’t claim to make money quick, you should always be wary and vet the product or investment before making any financial decision.

Conclusion

Social media can be harmful to your finances if not managed correctly. Reckless spending, decreased productivity, and poor investment advice are just a few of the ways that your finances could be impacted.

The best way to avoid these potential consequences is to limit your exposure. Try to set daily limits for yourself to decrease the time you spend online and advertising exposure.

Have you had a bad experience with social media? Comment below!

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Forrest
Forrest is a personal finance, entrepreneurship, and investing enthusiast dedicated to helping others obtain life long wealth. He owns several different blogs and is also passionate about health and fitness.

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