Using social media is a great way to find deals. You can follow your favorite brands on Twitter for up-to-the-second updates about sales and promotions, for example. Or skulk around Pinterest to peek at others' virtual wish lists in the days running up to Black Friday. With all the ways social media allows us to save, it might seem like the key to tightening your budget.
But in fact, there's some evidence — both anecdotal and scientific — that the FOMO you get from social media might make it harder, not easier, to save.
For the unfamiliar, FOMO stands for "fear of missing out" — that creeping sensation of loneliness and self-doubt you get when you scroll through Instagram photos of your friends having a ball without you. Wikipedia describes it as "a compulsive concern that one might miss an opportunity for social interaction, a novel experience, profitable investment, or other satisfying life event."
And the nagging worry that you're not keeping up could cause you to spend more than you should.
In a story in The New York Times this week, Carl Richards points out a Harvard University study from 1995 that explored how comparing yourself to others can affect your decisions about money. Participants were asked if they would rather earn $50,000 in a world where everyone else earned $25,000, or $100,000 in a world where everyone else made $200,000. Surprisingly, a full half of the participants wanted to earn less money, as long as they were earning more than everyone else.
"It turns out that we struggle with relative comparisons and money," Richards writes. "Instead of focusing on what’s in our best interest, we compare ourselves with others and act accordingly."
You can see how this drive might be exacerbated when looking at Facebook or Instagram.
The idea was echoed recently in LearnVest, where Karyn Polewaczyk relates how FOMO led her to take a vacation she couldn't afford. After a few days of chilling with her wealthier crew, Polewaczyk went to buy a bottle of Coppertone sunscreen and got her debit card declined.
FOMO can take "an emotional toll, triggering anxiety, depression, and acute comparisonitis," she writes. "That last factor can wreak havoc on our finances when we attempt to keep up with a million imaginary lifestyles while ignoring our own real bottom line."
Thanks to the likes of Facebook, Foursquare, and Instagram, FOMO creates a giant measuring stick, where we’re constantly comparing what we’re up to to the rest of our 762,000 "friends." You can find yourself wishing you were simultaneously checking into that chi-chi rooftop bar, getting your first novel published (squee!), reclining Brigitte-Bardot-like on a sepia-toned beach — and DIYing chevron stripes on your dresser, à la some viral idea spreading like wildfire on Pinterest.
And suddenly it’s definitely not OK to be cooling your heels on your couch. [LearnVest]
Though anecdotal, Polewaczyk's story complements a Columbia University and University of Pittsburgh study from 2012, which showed a link between the amount of time people spend on Facebook, and the amount of credit card debt they have. The research showed that just five minutes on Facebook each day can lower people's self control when it comes to financial decisions, leaving them with more debt.
Now that social media is an almost unavoidable part of life, how can we prevent ourselves from making comparisons that are ultimately bad for us?
Richards points out, "We can start by applying a filter to our decisions. The next time we’re faced with a choice, we need to filter it through the possibility that we’re weighing our options based on how it helps (or hurts) others."
At the end of the day, he says, "How close can we possibly get to our goals if we’re constantly chasing someone else’s?"
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