Money & Career

What to do when FOMO sends you into debt

Getty Images Author: Canadian Living Credits: Getty Images

Money & Career

What to do when FOMO sends you into debt

For Sarah, it took a two-week social media hiatus to stop over​spending. The 35-year-old Toronto event manager (who asked us not to use her real name) had racked up a $7,000 credit card bill from online impulse shopping. The spending trigger? Her emotional response to the images posted on social media: the perfect kitchen reno, the fancy vacation or the latest handbag. The more time she spent on social media, the more inadequate she would feel and the more she would splurge.

"I have a serious shopping problem," she admits. "I enjoy expensive purses.
I also have a lot of travel expenses from destination weddings and bachelorettes. I look at pictures of new products from my favourite stores, or pictures of people vacationing or enjoying nice things, and I think to myself, I deserve that. I work hard for my money."

Sarah's not the only one who feels this way. According to a recent study by public relations firm Citizen Relations, 56 percent of Canadian millennials (those aged 18 to 30) feel driven to live beyond their means because of social media. It's the "fear of missing out," also known as FOMO, that has influenced the spending decisions of millennials in particular, 68 percent of whom will make a reactive purchase following an emotional response to social media. Trips are FOMO's top driver, followed by parties, events and meals.

The overspending epidemic is worrisome: We're experiencing the highest level of debt per capita in Canadian history (and that's excluding mortgages), while savings rates are close to a five-year low.
 
Rob Serra, regional director at Investors Group in Guelph, Ont., has seen the impact of social media spending, primarily with the children of his older clients. "Debt seems to be more acceptable today, as opposed to my parents' generation," says Serra. "Some in the millennial generation tend to treat credit cards as disposable income; carrying credit card balances is too common. Ideally, purchases should be made with disposable income or planned savings. Spending habits and savings need to reflect income—keeping up with the Kardashians isn't going to gain you any long-term financial success." Curtailing social media–induced overspending has become one of Shannon Lee Simmons' areas of expertise.

After hearing how social media made friends and clients feel inadequate, the 30-year-old Toronto financial planner launched @therealselfies, a campaign to reflect the actual cost of the places and things featured on social media.

One of her first posts was a receipt for a meal at a fancy vegan restaurant in Toronto. But instead of writing a typical Instagram caption, like, "Yum. A fabulous meal with friends," she wrote, "This shiz costs money." That struck a chord with followers, and she decided to spend a year posting the truth about the cost of shopping sprees, vacations and restaurant meals seen on social media. Based on that experience, here is Simmons' advice on social media and budget survival.

Social media detox
Simmons often suggests that overspending clients try a social media detox. "Social media doesn't make us poor," she says, "but it has the power to make us feel inadequate and it increases the pressure to spend money to look like you're having a wonderful life."

In Sarah's case, two social media–free weeks helped her identify her triggers for overspending: celebrity and lifestyle bloggers and newsletters from online retailers. As part of her detox, she unsubscribed from emails sent by her favourite stores and she unfollowed some of the more enticing bloggers. That meant she didn't know about sales and discounts and wasn't tempted to shop. The strategy worked. Sarah still shops, but she's more aware of when she has to take a step back. She's also chipping away at her debt.

Limit time on social media
Simmons also encourages clients to avoid social media first thing in the morning and before bedtime. "In the morning, it sets the tone for your day, and at night, you're going to bed feeling like garbage," she says. "If you use social media responsibly, it helps you understand that the perfect post costs money."

Identify why you're spending
It's normal to spend money and to share with friends. But if you're trying to curb spending and tempted to drop a lot of cash, think about the emotional return on your investment. Are you buying something because it will make you happy or because your friends have it? Are you trying to fill a void with the temporary rush that spending gives you? Asking these questions is a great way to combat the pressure to overspend. Simmons' best advice: "If it's happy spending and you can afford it, go for it. If it's unhappy, avoid it." While it may be possible to budget for things that make you happy, many people overspend because it makes them temporarily happy, and that's a dangerous place.

What's important, says Simmons, is awareness of our individual triggers for overspending so we can step back, acknowledge the feeling and resist the urge. "No one ever posts a pic of their bill after an exotic vacation or of themselves at home alone in pajamas, watching Netflix and eating cereal," she says. "Maybe they should. Social media is a highlight reel. We all need to use it responsibly and to understand that everything costs money."

Don't overspend. Check out these five ways to keep track and stay on budget.

This story was originally part of "Keeping up with the Instagrammers" in the November 2015 issue. Subscribe to Canadian Living today and never miss an issue!
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What to do when FOMO sends you into debt

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