You’re scrolling through Facebook or Instagram when you spot a photo of a friend sporting a new stylish watch you just have to have. Before you know it, you’re on the retailer’s site, entering your credit card details and awaiting your own fabulous timepiece.
Keeping up with Joneses has always had a negative impact on finances. And now, social media ups the ante even more — not only by making it so much easier to see lavish lifestyles you don’t have but also making them easier to emulate.
According to an Ally survey, 80 percent of centennials and 74 percent of millennials say social media plays a role in what they buy and how they buy it.
With temptation to spend at your fingertips, you need a game plan to use social media responsibly, so your finances stay on track.
Watch: Ally on Your Cheddar
Social Media Doesn’t Always Paint an Accurate Picture
Social media doesn’t buy happiness. (Please repeat.)
It’s important to keep in mind that most people don’t post photos of drab hotel rooms and questionable plates of food. Instead, most use social media to highlight their best life, which, often embellishes certain details. This can leave you coveting an experience that quite possibly doesn’t live up to the hype. Or a reality that you can’t afford.
Our recent survey of consumer views bears this out. People who have a negative view of their financial situation use social media significantly more than those who have a positive view of their pocketbook’s status (40 percent versus 32 percent).
What does improve happiness? Well, according to the survey, a sizable — and growing — savings account, (ahem, like the ones found at Ally Bank that provide generous interest rates.
For most, happiness plateaus after reaching a household income of 75 thousand dollars per year. However, happiness can also increase as the amount a person has in savings increases. Our survey found distinct peaks in happiness at 15 thousand dollars (after six months of savings), 250 thousand dollars, and one million dollars.
Purchase With Purpose (and Control)
If you’ve been eyeing a new refrigerator or shopping for the best airfare to the Caribbean, you’ve probably seen ads for those very things pop up in your social media feeds. That’s no accident.
“Advertisers are targeting you based on your previous shopping and your interests,” says Saloni Janveja, executive director of social media and innovation at Ally.
They’re hoping that by putting ads in the places you frequent — i.e., social media sites — you’ll be more likely to make a purchase. When you encounter these posts, take a step back and ask yourself if it’s something you really need or just something you really want, recommends Janveja.
However, there are times when it’s perfectly okay to buy something you’ve seen on social media, Janveja says. “The important thing is to not make a splurge purchase,” she explains. “Make it a conscious choice.” And if it’s a big-ticket item, save up until you can pay for it in full.”
Be Careful With What You Share
Posting a cute photo of your boarding pass pre-flight seems like fun and games on social media. But it also opens the door to potential identity theft and fraud.
Certain social media posts can be a treasure trove of sensitive personal information, including your full name, date and place of birth, or home address — all details that can potentially be used to steal your identity and hack into your financial accounts.
Once a cybercriminal attains fraudulent access to your accounts, they can withdraw money, initiate transfers, apply for loans, and perform other financial actions that can impact your overall credit and account health. While these consequences can sometimes be resolved by your financial institution – an ounce of prevention is usually much easier than the cure.
As a rule of thumb, anything you post on social media should be free of all identifying details.
Use Social Media to Your Advantage
Before you declare social media a scourge to your money, remember it can be used to improve your finances, too.
Showcase Your Talents
Social media can be a great outlet to showcase your talents and make connections within your professional industry. You can stand out to potential employers by posting your own thought leadership and other articles related to your profession.
LinkedIn and Twitter especially are great platforms for thought leadership. Joining Facebook groups related to your industry are an easy way to build your professional network and engage with others in your field.
Follow financially-savvy influencers who can help you with your money goals. You have plenty to choose from, including people working to slay their student loans, beating back credit card debt, saving for early retirement, or investing in real estate. You can also follow those detailing clever money hacks and add found money to your budget.
Filling your feed with inspirational or educational content can help make scrolling through social media more of a positive experience, for you and your finances.
Your friends’ feeds may always be full of snaps from their latest European getaway or kitchen renovation. Learn to take these posts in stride, knowing that happiness doesn’t lie in emulating what you see in a digital newsfeed.
Discussion questions – let us know your thoughts in the comments below.
- What have you seen on social media that has motivated you to save money?
- What is an unnecessary purchase you’ve made as a result of seeing something on social media?
- How has social media caused your spending to increase?