Social media has proven to be a game-changing technology. Facebook, Pinterest, Twitter, Instagram and Snapchat have profoundly impacted all of our lives – and these platforms are likely to be the mere tip of the iceberg as technology continues to develop rapidly.
The benefits of social media are well documented. It offers unprecedented interconnectivity and communication; near unlimited access to content, both informative and entertaining; and has revolutionised marketing for business owners who can now reach any and all potential customers in real-time.
What we are less familiar with, however, are the downsides of social media, which is unsurprising considering it’s still in its early years.
Some well-informed conclusions are coming to light – social media, for example, could be directly linked to your spending habits. Especially with the increase of buy now, pay later lending options.
Life through the lens: The Instagram lifestyle
Instagram – a social networking platform allowing users to upload photos and videos, edit them with filters and organise them using tags and location has enjoyed a meteoric rise in popularity in recent years. Users of the platform can browse other users’ content through tags and locations; view trending content; “like” photos; and follow other users to add their uploads to their feed.
There are few things more addictive than our Instagram feeds. It is the ultimate ‘work break’ ( or procrastination tool) that allows you to keep on top of all of the latest trends, goings on of your friends, family and favourite public figures in the most digestible format.
A picture, after all, is worth a thousand words. It appears, though, to have become something much bigger than intended.
Average user time spent on the app has doubled in less than a year – and according to the Royal Society for Public Health, social media as a whole has “become more addictive than cigarettes.”
Any platform with such addictive qualities can influence peoples lives in ways we are only just beginning to understand.
Studies are beginning to find links between social media use and mental health problems due to negative self-comparison.
Psychologists have long understood the purposes and consequences of self-comparison within our peer groups, workplaces and neighbourhoods. Social media has taken these comparisons to a new, previously unimaginable level. Our feeds give us 24-hour, instant access through posts and stories to watch our friends jet off on holiday, buy a new car and dine at the best spots in town.
Instagram in particular, offers a window into people’s lives – but only the interesting parts, only their wins.
As a result, users are left comparing their whole lives to the best parts of someone else’s – an entirely unfair comparison. Think of the ‘social media influencer’ modelling the latest fashion trends and offering you their discount code; or the amateur athlete revealing six-pack abs against a perfect sunset background, telling all you need to get lean is to buy the latest Herbalife supplement.
Studies show that over 75% of people exaggerate or lie on social media, and “post a completely different reflection” of themselves. Social media allows us to put our best foot forward. It doesn’t require us to offer an accurate account of our daily routine – which in all likelihood wouldn’t make it to the trending page, social media influencer or not.
Overspending and the debt spiral
How, then, do overspending and debt fit within this context? Strong evidence is emerging that because of social media induced self-comparison, young adults, in particular, are overspending to keep pace – citing the FOMO (fear of missing out) phenomenon.
As Goldman Sachs put it: “We’ve always been concerned about what other people think of us — and have, in a way, built our budgets around it.” Again, though, social media has entirely redrawn the limits of this – as young adults strive to keep up not only with their peer group but with the thousands of influencers and celebrities on their feeds and on the trending page.
Credit Karma and Qualtrics have produced the most comprehensive study to date.
Their survey in the United States found that nearly 40% of millennials spent money they didn’t have to keep up with their friends and that they doubt they can keep the pace up for another year without going into debt.
Further, according to Pew Research: 40% of U.S. adults on social media say that seeing other people’s purchases and holidays on social media influences them to look into a similar purchase or trip. This emerging evidence is significant and demonstrates how social media feeds into the debt spiral.
The debt spiral is a concept we have referred to throughout our posts. At the core of most debt problems is an overspending problem: people spending too much money to enjoy a quality of life they can’t afford and resort to expensive short-term credit to fill in the gaps of this overspending, plunging them into debt.
There are two specific features of social media that particularly drive overspending;
- First, the rise of the modern blogger or social media influencer. This has particularly changed the way companies market their products (especially in the fashion and beauty sectors). Brands send selected products to be promoted by ‘influencers’ with high amounts of followers.
Often the influencer is given a discount code to encourage their followers to spend. This is a full-time, high-income form of employment for thousands of young, fashionable opinion leaders. With professional efficiency, they take that aspirational photo to promote the product causing thousands of their followers to race to buy it in the hope that they will look just as good.
- Second, consider times, where you have been browsing or shopping online and head to social media for a little break, up pops a brand or product you’ve looked at on your feed as an advertisement on an entirely different page.
This is no coincidence. Brands can ‘re-market’ to you on social media, tailoring the ads you see based on your online activity as well as the activity and preferences of your connections.
Buy Now, Pay Later culture
Buy now pay later providers such as the Swedish Klarna have launched in the UK, determined to sign up as much millennial as possible.
With its ease of user-friendliness and ‘coolness’ there is a recent trend of people having financial difficulties caused by buy now, pay later deals spiralling out of control.
Unplugging from the spiral
What to do then? How can you stop social media induced self-comparison from damaging your financial situation?
Hopefully, reading this post can serve as a first step. Consider and look deeper into the findings presented here.
Be very, very careful and selective about what you follow and consume on social media. What highly selective images are triggering envy in you; what celebrities or ‘influencers’ are you getting drawn into self-comparison with?
More importantly, is your feed and the content you consume leading you to make purchases you probably shouldn’t? Take the time to look through all platforms you are active on and do a full audit. Get rid of anything you feel might be leading you down the path outlined in this article. If it doesn’t inspire you or makes you feel bad about yourself ‘unfollow’.
As a final message, social media can often lead you to feel like you are missing out – often this is not accidental. Social media is a disruptive technology in its infancy – it is engaging, addictive and redefining the world in many ways, both good and bad. When it comes to your finances, for now, it appears best to be very careful as to what you consume on social media.
Chasing phantoms, striving to keep up with highlight reels on Instagram can ultimately rob you of long-term financial stability.
You can’t get a mortgage on your dream home with a crippled credit rating, or have the freedom to travel throughout your adult life if all of your income has to go towards paying off high-cost credit.
If you already find yourself in a financial position which is no longer manageable, you might benefit from a free debt advice consultation with one of our expert advisers, get in touch today on 0141 221 0999.
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