Is Fear of Missing Out fuelling your overspending?

Why does FOMO cause overspending?

Where is our FOMO money going?

Fight back against FOMO marketing

Socialising on a budget

Budgeting can be fun - we promise!

Why does FOMO cause overspending?

Most of us love eating out, taking part in experiences and joining in with activities when we can afford to do so. But social media updates from our peers and influencers makes it very difficult to look away from others having a great time, even when finances are stretched. And so, we spend more than we should.

A 2022 report by Credit Karma found that nearly 40 per cent of young adults said they spend more money on experiences than necessities such as paying bills. The reason was partly because they wanted to share the enjoyment of that experience with others on social media.

Post pandemic ‘revenge spending’ is also said to be a factor, as people rushed to enjoy shopping or experiences, they were denied during the Covid-19 lockdowns. Throw a cost-of-living crisis into the mix, with soaring grocery and energy prices, and it is easy to see why people are struggling to stop overspending or borrow money to fund their lifestyle choices.

Whilst there are ways to save on outgoings such as saving on your electricity bill or cutting back on your weekly food shop, it can be extremely difficult not to consider borrowing money to tide you over until the your next payday.

Short term loans offer a quick and easy source of funding for relatively short period of time, usually ranging from a few days to a year. However, these types of loans are high-cost short term credit option, and should only be used for one-off financial emergencies.

As with any type of personal loan, it’s always best to carefully research before applying for a short term loan and check for payday alternatives.

Buy Now, Pay Later is a payment option that is often offered by retailers and e-commerce platforms, allowing customers to purchase goods and services without paying up front. Instead, the cost is divided into smaller, more manageable payments, often with no interest or added fees. Customers can pay off their balance over time, typically within a few months to a year. The method of purchasing products has become increasingly popular to make purchases more affordable and accessible. However, even if there are no interest charges when paid on time, But Now Pay Later schemes are still a form of debt. Too much debt may lead to money problems.

Where is our FOMO money going?

Everybody knows it is more cost effective to eat and drink at home. But the social aspect of dining out, going to the pub or meeting friends at a coffee shop is hard to resist. So, it’s not surprising that eating out is often one of the biggest expenditures. Even eating out once a week, at a cost of £50, soon adds up to £2,400 a year.

For younger generations, buying new clothing can also be a significant spending cost. Women under 35 are the largest demographic group to be targeted by fast fashion retailers.
The association between your identity and clothing also means it can be hard to resist buying new clothing for social occasions, rather than relying on what you already have in the wardrobe or borrowing from a friend.

Aspirational experiences, such as travel, going to festivals or music events, and spa days are also showcased on social media, tempting people to part with their cash.

Fight back against FOMO marketing

FOMO put a name to an experience that marketers effectively exploit. Although time-sensitive marketing tactics such as end of year black Friday and cyber-Monday sales are not new, in the age of social media, they have changed and arguably become more valuable.

Marketing tactics take advantage of FOMO by showing consumers the most popular, in-demand items or highly rated options. This is a particularly important tactic for the travel and experience industry, because customers take a risk when they buy something, receiving nothing tangible in return, just the hope of a good time and a ticket.

Before social media, ‘influencing’ by others still took place and had an impact but at a much slower rate. Now many people spend hours on social media every day, consuming hundreds of videos and images at rapid speed. A lot of that content features or is an advertisement, designed solely to make money.

If overspending like this is stopping you from achieving your 2023 financial goals, such as saving a for a holiday deposit for a house, here are three simple ways to fight FOMO marketing:

• Reduce your social media usage. Setting time restrictions on social media apps via your phone settings can massively reduce the time you spend on social media. Take the time to notice how you feel when you spend less time in the social media bubble and track your spending before and afterwards.
• Prioritise social spending. At the beginning of each week or month, look at your social plans and decide which are the priorities. Leave some room for spontaneity but recognise it is not always possible to go to everything.
• Plan out a budget. Decide how much you have to spend on socialising or shopping, then set it aside. There are budgeting apps that can help make this easier for you. Once that pot of money is gone for the month, it’s gone. There is also a vast range of prepaid cards in the UK which can be useful in segmenting your finances seamlessly.
  
  
• Wait a week before buying. If you see a product on social media and feel the urge to hand over your credit card, wait a week or so first. A few days passing can often make you realise that it wasn’t such an urgent purchase after all.
  
  

Socialising on a budget

Being sensible with spending does not mean you can’t socialise. Quite the opposite, as there are thousands of clever ways to save money you can replicate with ease. There can be a stigma around admitting you can’t afford to do something, but there are some cheap socialising alternatives which allow you to see friends. That can be done without breaking the bank or getting a cash advance on a credit card by withdrawing money from an ATM to pay for a night out for example.

The first step is to be honest about your financial limitations with those close to you. You may find they are in the same situation, and if not, they will at least understand why some invitations may be turned down in the future.

Asking friends round for dinner then a film is a good alternative to heading to the cinema followed by a meal out, and you could even take it in turns to host. Heading outside for a walk or even a fitness challenge is a fantastic way to enjoy the fresh air or ride an adrenalin buzz together.

If you spot a craft night or wine tasting event on social media that you’d love to go to, replicate the event at home or even in the office instead. Watching out for online vouchers and special deals is also a good way to fill your need to share experiences, while watching the pennies too.

Budgeting can be fun - we promise!

We know, we know, the very word sounds like a chore. But budgeting can be fun, especially if it is shared with others, and there are plenty of tools to help these days. One of many simple ways to start saving is to list your goals - for example to be debt free or replace your old car. Having financial goals in mind and listed somewhere visible may provide you with the motivation to be disciplined and continue to save.

Try being creative and find ways to make saving money more social. For example, perhaps you could host a clothes swap evening to jazz up your wardrobes with your friends. Or host a night in where everyone brings a snack or two.

Try remembering what you are saving for, and what a difference it will make to you personally. And think carefully before being tempted to take out a quick loan, borrowing more money is often not a long-term solution.