Not so long ago, there were no social media platforms. It may be difficult to imagine. But, the internet, known then as the “world wide web” was a tool for researchers and the defense establishment.
Consumers relied on conventional print and television media, and word of mouth when making decisions about what products to buy or services to hire.
The Internet Became Mainstream
Gradually, the internet became an important vehicle for institutions, organizations, and businesses. It allowed them to store vast amounts of data bits.
And then came Facebook, a platform that would dramatically alter the way we communicate with and connect to each other.
And the rest is history, as they say.
Today, there is a full offering of social media channels in addition to Facebook, such as Twitter, LinkedIn, Snap, and Instagram. And they are impacting your spending decisions, creating financial stress and negatively affecting your financial goals.
Social Media is Driving Spending Decisions
Almost 50% of consumers ages 23 to 38 say that social media influences them to spend money on experiences such as vacations, dining out or group excursions. A survey conducted last year by Allianz Life Insurance found that more than half of millennials were influenced by social media to make unplanned purchases.
At the same time, numerous studies have reported that money has become a leading cause of stress, especially among adults ages 23 to 38.
Why Social Media is So Important to Brands
According to Facebook’s demographic report from October 30, 2019, there are more than 2.45 billion monthly active users around the world. Roughly 1.62 billion people around the globe log onto Facebook every day. These numbers are increasing, particularly in developing countries.
Instagram, a Facebook platform, has more than 1 billion active monthly users worldwide. LinkedIn has become the channel for reaching business customers, learning about industries, searching for employment and recruiting employees. Twitter, the number one news source for billions, enjoys a worldwide audience of 330 million active monthly users.
The average internet user spends a little more than 2 hours per day on social networking platforms. And this is the average. Your daily social media interaction may be even greater.
This transformation into a global, digital world meant that if brands wanted to reach you, they had to become social too. They had to change the way they advertise their services and products.
4 Ways that Social Media Can Derail Your Financial Goals
#1. Advertising
Digital platforms have enabled brands to engage in highly sophisticated, targeted marketing. By tapping into social media platform algorithms, brands can develop ads that are targeted to you. You click on the ad which takes you to the website, and in a short time, you make purchases you don’t need.
#2. E-Commerce is Pleasant and Easy
Shopping online is easy. You can do it anywhere. Probably all your favorite brands have an online store. The online shopping experience is seamless, enabling immediate gratification. You see the advertisement, you click or slide, you go to the brand’s website or online store, place the order, pay with your credit card, and the item is on its way!
#3. Fear of Missing Out (FOMO)
Social media platforms let us stay connected to family and friends, even from long distances. Platforms such as Instagram allow us to share our experiences with everyone. But, when you see your friends doing fun stuff, you want to do it too. It becomes very tempting to throw your budget out the window. You end up buying tickets and taking off for some exotic place even if you don’t have the money to pay for it.
#4. Social Media Influencers
Social media influencers help brands expand their market reach. The problem for you is that when you see your favorite celebrities sponsoring a product line, you feel you must have it too. You want to be like your favorite celebrity.
How can you Protect Your Money from Social Media Triggers?
- Unfollow influencers. This may not be great for brands, but it will be great for your budget.
- Identify your triggers. What are the messages or images that put you in a buying mood? When you feel triggered, put your digital device down for a little while. Think about what you are feeling. Determine if your desire to make a purchase is based on need or is it something to make you feel better.
- Use your social media as a personal coach. Change your social media Feed so that you see posts that reflect a healthy financial life. Follow brands that keep you motivated to stay focused on your goals.
- Keep your budget in front of you when you go online.
- Track your spending. Tracking your spending is key to meeting your financial goals.
- Keep your credit cards in an inconvenient location. You will have to make more of an effort, giving you time to think about what you are about to do.
