Social media use may be the culprit behind your struggle to rein in spending.
It is well-known that social media has the ability to make you feel better or worse, but research has emerged that the effects of social media use extend even to how we spend our money.
What you’ve always suspected has been confirmed: regularly browsing Facebook, Instagram and Pinterest causes you to spend more money. But this is not because of digital advertising, even though regular consumption of social media increases your exposure to more invasive advertising messages.
Rather, it’s the way social media influences our emotions that causes us to reach for our credit cards more often.
1. Having Close Facebook Friends Make You Spend Money
Building a strong network of close friends is important to your psychological health. However, your primary group of friends has also been shown to influence your decisions in various significant ways.
When you combine that influence with the 24/7, “always-on” nature that Facebook fosters, you become much more likely to spend money.
A 2013 joint-study by Columbia Business School and University of Pittsburgh found that Facebook users displayed lower self control, especially when they regularly received “likes” and positive comments from their network of close friends.
The feel-good lift they got from these positive interactions boosted their self-esteem, which in turn lowered their self control. This is why heavy Facebook use “is associated with a higher body-mass index, increased binge eating, a lower credit score, and higher levels of credit-card debt”.
We’re just as concerned as you that Facebook apparently not only makes us poor, but also fat, but let’s deal with one problem at a time.
How to Maintain Control
As we’ve noted before, self-control is a crucial factor in managing personal finances, and lower self-control results in poorer financial decisions.
The study quoted above found that Facebook users got an ego boost when they focussed on what they themselves (and not what their friends) were posting.
Therefore the solution lies in limiting those humble-brag posts or carefully posed selfies meant to fish for compliments. Doing so may not stroke your ego so much, but it’ll keep you grounded and focussed on maintaining the self-control needed for achieving your financial goals.
And then, once you’ve saved up enough to go on that summer vacation, feel free to humble-brag and fish for compliments all you want from Jeju Island.
2. Pinterest Makes You Spend the Most Money
Facebook may be the most influential social media site in making you open your wallet, but it is Pinterest that will make you dig deepest.
An analysis of almost 700 million online shopping transactions found that on average, Pinterest users spent about 70% more per order than Facebook or Twitter users. When Pinterest users made a purchase, they spent US$170 on average. In contrast Facebook users spent US$95 per session, while Twitter users spent US$70.
It seems that looking at an endless parade of pretty and shiny things does a number on your financial control. When you finally give in, decision fatigue makes you give in hard.
Oh, but that’s not you, you say? You don’t browse Pinterest for the beautiful things; instead, you trawl for DIY projects you can work on that will hopefully result in a close approximation of said beautiful things?
You’re not safe either – when you browse Pinterest (versus other social media sites), you do so with a mindset that’s much more interested in acquiring stuff. So even if you aren’t after the expensive store-bought things, you’re still likely to end up starting a project that you haven’t budgeted for.
How to Maintain Control
The old personal finance standard applies here – budget.
If you’re browsing for inspiration, try setting up 2 Pinterest boards – one ‘fantasy’ board and one ‘working’ board. On your ‘fantasy’ board, you can go ahead and pin all the things that catch your fancy.
On your ‘working’ board, curate only the options that would actually work and that you can actually afford. You may refer to your ‘fantasy’ board for ideas, but when you’re ready to make a purchase, look only at your ‘working’ board.
And if you’re the craftsy type, set – and stick with! – a budget for all your Pinterest projects. That way, when you inevitably start handcrafting your own Mason jar pendant lamp fixture, only the walls need get a hammering, and not your bank account.
3. Instagram Makes You Buy Pricey Booze
In case you haven’t been keeping up, food pics are out. What’s in? Booze. And not just any old beer or stout from the coffeshop downstairs, mind you. You better be posting Instagram-approved spirits, or you can kiss your social capital goodbye.
No, Instagram didn’t take an unexpected left-turn into the sommelier business. It’s just that millennials are more likely to buy branded booze so they can impress their social circle, according to a new report released earlier this year.
Since Instagram (and Snapchat) have become the primary channels of social interaction, those aged 35 years or younger feel obliged to spend on higher-end branded spirits so they can show them off in their social media feeds.
Evolve Media, which co-commissioned the study, noted that “knowledge of spirits is becoming social currency among millennials and they will order name brands to impress their peers.”
The study found that what they were doing, where they were, and who they were with also strongly influenced what brand of alcohol millennials spent on.
How to Maintain Control
Let’s get one thing out of the way – drunk is drunk, whether you get there via cheap beer or fine cognac. If your only reason for buying alcohol is to look good on social media, then, buddy, you’re missing the point.
Instead of slavishly following what everyone else is doing, why not cultivate your own personal drinks list. Your unique tastes might get you put in charge of the bar at your popular friend’s party, and is there a better way to accumulate the social capital you so desperately crave than a social media shout-out from the cool kids? (They still call them that, right?)
Even if following your buzz doesn’t gain you quite the following as you hoped, it’s far more to enjoyable (and sensible) to spend money on what you like.
So go on and crack open that Taiwanese Pineapple beer. After all, you don’t have to Instagram it. Really.
Read This Next:
By Alevin Chan
A Certified Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimize happiness and enjoyment in his life.