Daily lattes, last-minute concerts and $100 post-party IV hydration sessions. Sometimes our spending can get out of hand — especially when you throw social media into the mix.
According to a recent survey by Bankrate, millennials are more likely to feel pressured to overspend (64 percent) compared to older generations (40 percent).
Out of all age groups, they’re also most likely to say they’re influenced to overspend by their friends (45 percent) and social media (27 percent).
This influence by acquaintances online and IRL may stem from an inherent need to experience everything deemed good, fun or interesting by their peers, also known as FOMO (the fear of missing out).
Spending related to FOMO
A 2019 survey by Charles Schwab reinforces Bankrate’s findings; 49 percent of millennials have been influenced by social media to spend on experiences compared to 44 percent of Gen Z, 28 percent of Gen X and 16 percent of Baby Boomers.
It’s safe to assume a portion of this behavior stems from the fear of missing out, which can affect anyone of any age but seems to hold higher prevalence among younger generations.
Dr. Mary Gresham, Ph.D., cites the rising costs of education, housing and healthcare, paired with stagnant salaries, as the challenges millennials currently face with finances.
“These cultural factors increase the pressure on millennials to overspend and go into debt, and there is little support to dial it down,” says Gresham. “Social media highlights the best moments of peers’ lives and creates additional pressure.”
Experiential vs. material spending
In the Bankrate survey, the most common items millennial respondents feel pressured to overspend on include clothing, shoes and jewelry (32 percent), social activities and dining out (31 percent) and cars (26 percent).
This close tie between material goods and social activities may come as a surprise, seeing as millennials are known for prioritizing experiential purchases.
Financial implications of FOMO spending
According to Bankrate survey findings, 50 percent of millennials have overspent or considered overspending on a credit card in order to look successful to others.
Unsurprisingly, overspending can easily have a negative, long-lasting impact on your financial health — from causing credit card debt to dwindling your savings to hurting your retirement fund.
“Most people do not take the time to look at their spending and notice the true cost of something, which includes not only the dollar cost but also everything else you must trade out to pay for it,” says Gresham.
How to balance your priorities and combat FOMO
To help keep more money in your pocket, we’ve outlined a few ways you can combat your FOMO and save money in the process.
Reduce your social media exposure
The less time you spend on social media, the less you’ll, presumably, be tempted to spend on unnecessary purchases.
A 2013 study by researchers at Columbia University and the University of Pittsburgh found that time away from social media can positively affect one’s self-control.
“To our knowledge, this is the first research to show that using online social networks can affect self–control,” said co-author Andrew T. Stephen in the press release.
According to this research, higher levels of social network use was associated with a lower credit score and higher levels of credit card debt, among other things.
Create a budget
Ian Bloom, financial planner and owner of Open World Financial Life Planning, suggests building a budget using a software package like Mint or YNAB and uploading your spending history.
“I have [my clients] go in and rate each of their “fun money” purchases based on how much happiness it brought them,” says Bloom. “We pick a threshold… and cut out everything below that threshold. That newly available money, plus everything that we already had leftover at the end of the month, goes to attack the debt.”
As an alternative, Bloom suggests going a month without eating out at restaurants, ordering coffee or spending on your favorite luxuries.
“See what you miss most during that month and add that back in while keeping the rest of the now freed-up money to pay on the debts,” says Bloom.
Prioritize what you participate in
When it comes down to it, simply being honest with friends and family about your saving goals can help you pick and choose what activities or purchases you’re most interested in spending on.
“The best tip is to take time to sit and imagine the future after the event is over… and take time to answer how attending or not attending a dinner, trip or concert will make you feel a month later when the bill is due or the money is spent,” says Gresham. “This helps you make choices about what you truly value in your life… a calm feeling, a feeling of money well spent with conscious awareness.”
For added savings, scan coupon sites like Groupon or RetailMeNot for deals related to future spending you might do. When push comes to shove, you can also suggest free or less expensive alternatives to activities.
What if you’re already knee-deep in debt?
If you’re already wading through credit card debt, Jason Speciner, financial planner and founder of Financial Planning Fort Collins, suggests starting with a plan of action.
“Whether you go with one of the traditional methods — like the snowball, avalanche or iceberg approach — or choose your own unique strategy, begin with the end in mind and know the steps you’ll take to get there,” says Speciner.
We’ve outlined a few options that can help you pay off your debt, including ways in which you can earn extra money towards your payoff.
Balance transfer card
A balance transfer card can help you consolidate your debt onto one card and pay it off within an introductory zero percent APR window. With these introductory offers, you can completely wipe out your debt without paying anything in interest.
When considering a balance transfer card, it’s important that the card offers perks that will benefit you after your debt is paid off. The Discover it® Balance Transfer, for example, offers both an introductory zero percent APR for 18 months on balance transfers (13.49% – 24.49% variable APR thereafter) and a rotating 5 percent cash back category at places like gas stations, grocery stores, restaurants and more each time you activate (up to $1,500 in purchases each quarter, then 1%).
Other than ensuring your card of choice will be useful to you after debt payoff, take caution that you don’t slip into old spending habits.
“Keep making the minimum payments to avoid fees and, of course, try not to incur more debt along the way,” says Speciner.
Personal loans typically come with higher interest rates compared to balance transfer cards and are not widely recommended.
According to a June 2019 Bankrate survey, millennials reign as the side hustle generation. Forty-eight percent of millennials reported earning income on the side compared to 39 percent of Gen X and 28 percent of Boomers.
A side hustle can not only help you earn extra money, but keep you busy enough to prevent unnecessary spending. Gig economy jobs like DoorDash or Uber, freelance work or selling unused or unwanted items can help you quickly earn cash in your downtime. But make sure that whatever money you make goes toward paying off debt, or your efforts will be all in vain.