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Anyone who’s ever been on social media knows how scrolling through other people’s posts can affect your mood and your behavior. Seeing photos of friends’ houses, cars, vacations — or their other latest purchases — can make you ponder whether your own life would be better by acquiring those things.
According to a new Bankrate survey, the most popular social media platform is Facebook (used by 76 percent of respondents), followed by Youtube (used by 55 percent) and Instagram (used by 51 percent). No matter which platform you use, seeing the nice things other people own can ultimately lead to impulse buys that disrupt your budget and deplete your savings.
Key social media influence takeaways
- Over the past year, U.S. adults have spent $71 billion on impulse buys based on what they saw on social media. (Bankrate)
- Nearly half (48 percent) of social media users say they’ve made an impulse purchase based on something they saw on social media. (Bankrate)
- Of those who made such a purchase, 68 percent regret doing so. (Bankrate)
What success looks like on social media (vs. reality)
Commonly enough, scrolling through your social media brings up posts showcasing your friends’ vacations as well as their homes, cars or other material possessions. When it comes to social media posts, slightly more than half of people (51 percent) feel social media promotes an unrealistic lifestyle, while 57 percent agree that people sometimes post things to appear more successful, Bankrate’s survey found.
Despite this, only one in five people (20 percent) surveyed by Bankrate reported feeling negatively about their financial situation after seeing others’ social media posts, while only 9 percent said social media has actually had a negative impact on how they manage their money. Likewise, less than half of those surveyed (43 percent) said they regretted an impulse purchase they’d made in the past year based on a product they’d seen on social media.
Based on these survey results, while many believe social media promotes a lifestyle that’s not true to life, the majority say this doesn’t negatively impact how they spend their own money, and most also don’t regret their impulse buys that resulted from social media posts.
When it comes to generations, millennials and Generation X-ers are slightly less likely than their younger and older counterparts to regret social media-driven impulse buys. Percentages of each generation who reported regretting such purchases are as follows:
- Generation Z (ages 18-26): 58 percent
- Millennials (ages 27-42): 55 percent
- Generation X (ages 43-58): 56 percent
- Baby boomers (ages 59-77): 62 percent
Social media’s impact on your budget
Of the younger generations, slightly more than half of Gen Z-ers and millennials (51 percent and 53 percent, respectively) have made an impulse purchase of a product they saw on social media in the past year, Bankrate’s survey found. Significantly lower percentages of Gen X-ers and baby boomers (34 percent and 25 percent, respectively) reported making such purchases.
Similarly, of people who made such impulse purchases, the average amounts spent by the younger generations were significantly higher than those spent by the older ones:
|Generation||Average spent on an impulse purchase|
|Gen Z (ages 18-26)||$844 ($200 median)|
|Millennials (ages 27-42)||$1,016 ($200 median)|
|Gen X (ages 43-58)||$522 ($150 median)|
|Baby boomers (ages 59-77)||$418 ($100 median)|
Survey respondents reported regretting such impulse buys more as time went on. While 57 percent regretted such a purchase less than a year after it was made, 62 percent regretted it after more than a year.
One strategy to avoid making a large impulse buy and later regretting it is to keep the money in an interest-bearing savings account instead, and to decide later whether the purchase would be worth it.
Financial pros and cons of social media
Whether social media helps or hurts you financially can depend on factors such as the posts you view, the influencers you follow and the advice you choose to take. When it comes to spending and saving, the pros and cons of how social media affects people financially include:
- Social media can spur productive questions and conversations about finances.
- Social media can make it easy to research what’s worth (and not worth) the cost for you regarding renovations, electronics and other products.
- Social media increases the ability to compare costs and find bargain deals.
- Incorrect financial advice (from non-experts) is common enough on social media.
- Seeing someone else using a product may sometimes cause others to incorrectly believe it’s affordable for themselves as well.
- Social media can persuade some to make purchases they may not ultimately want.
Despite its sometimes negative connotations, social media can be beneficial as a tool to help people make thoughtful decisions on spending and saving their money. It’s important to know your spending limits and make sure you’re resorting to a reliable source when researching or purchasing products.
Like other platforms (TV, books, websites, etc.), the financial advice you see on social media isn’t inherently good or bad. It depends on the specific advice as well as your circumstances.— Ted Rossman | Bankrate Senior Industry Analyst
Tips to build your savings and avoid impulse buying
Reasons people buy things impulsively often include:
- Distraction: Often referred to as “retail therapy,” shopping can be seen as a distraction from one’s problems.
- Good deals: Seeing what’s perceived as a great deal often causes a feeling of urgency to make a purchase before the deal ends.
- Enjoyment of shopping: Buying a shiny, new item can bring on a rush of dopamine, which allows for feelings of pleasure and happiness.
“Impulse purchases can be problematic if they cause you to overspend, especially if you finance these purchases with a credit card,” Bankrate’s Rossman says, citing the current record-high credit card rate of 20.7 percent. “This is why I recommend sleeping on a purchase before hitting the buy button.”
Rossman also recommends building discretionary purchases into your monthly budget to help ensure you can handle their cost.
Other ways to avoid impulsive purchases include following a budget and not making credit card purchases that you won’t be able to pay off right away. It often pays to unfollow social media accounts that tempt you to spend, and to follow people you consider to be good influencers.
Building your savings is one of the best uses for money saved from avoiding impulse buys. You can save a bundle by avoiding such purchases, and that money can earn a rate that’s currently outpacing inflation in a high-yield savings account.
Savings account FAQs
Some high-yield savings accounts currently earn annual percentage yields (APYs) of 5 percent or more. These accounts are often found at online banks, which don’t bear the expense of maintaining branches and can pass along the savings in the form of high rates.
A high-yield savings account is similar to a standard savings account, although it pays a significantly higher rate — which is typically many times higher than the national average. Liquid savings accounts provide easy access to your money, which makes them a good place for your emergency fund.
A savings account is most useful when it earns a competitive rate of return and allows for easy access to your funds. Like some other deposit accounts, a savings account keeps your money safe when it’s from a bank that’s insured by the Federal Deposit Insurance Corp. (FDIC) — which means your money is protected up to $250,000 per account holder if the bank were to fail.
Some savings accounts charge a monthly service fee, which often can be avoided if you maintain a set minimum balance. If your bank requires such a minimum balance, make sure it’s one you can maintain to avoid the fee — or else, find a bank that doesn’t have any such minimum balance requirement.
Another fee to watch out for is out-of-network ATM fees. When using an ATM out of your bank’s network, you can be charged an out-of-network ATM fee from your bank, and the bank that owns the ATM will likely impose a surcharge of its own. The average total cost for such an out-of-network ATM withdrawal is $4.73, according to Bankrate’s checking account and ATM fee survey. If you’re a frequent user of ATMs, be sure to find a bank that provides plenty of free ATM access.