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Are millennials spending too much due to social media?

With the rise of Insta celebrities and social media showing us the life we are apparently missing out on, it’s no wonder some feel the pressure to keep up. No longer are we simply seeing our neighbours new car, we are bombarded daily from every angle with the message we should have more. More travel, a bigger home, more jewellery, a flashy car.  We can have and do it all, but what’s really happening when we live that way?

Lissette Calveiro is one example. Moving to New York for an internship she was excited. Once she started on social media she found herself shopping to create the perfect Instagram post. Before long, she found herself in debt, even after she landed a publicists role. Her Instagram feed showed a gorgeous lifestyle but she was broke.

Fashionista did research and discovered it would cost an average of $31,400 a year to maintain a lifestyle similar to what is shown in their feeds.  According to AllianzLife, 57% of millennials spent money they didn’t have to buy something they saw on social media.  Whereas only 28% of Gen Xers and 7% of Baby Boomers said the same. Known as FOMO spending (Fear Of Missing Out), they are trying to keep up with friends and social media celebrities. Fearing if they aren’t doing everything theý see in their feed, their life isn’t as great.

The amount millennials and Australians in general spend now compared to older generations is staggering.  The debt Australians households carry as a result and the idea that debt is normal is crushing us, preventing us from ever getting ahead financially unless we take control.

Previously, you used to be able to leave credit cards at home to stop yourself being able to spend. Now, we can pay using our phones, get cash out at atms without our cards and of course online there are options such as AfterPay.  Add to that you can shop directly from social media and you quickly realise how easy it is to get into a spiral spending money you don’t have.

With a few clicks, anytime, anywhere, you can have pretty much anything you want either in front of you or delivered.  Growing up in a world with instant gratification has made it easier than ever to spend beyond our means. It’s as simple as the famous marshmallow test where children were offered one marshmallow and told if they wait, they can have two when the researcher returns. Most children couldn’t wait and went for the instant gratification.

Follow-up research with these participants showed the ones who were able to wait and delayed their gratification performed better academically and later in their chosen careers. Delayed gratification is something many millennials haven’t had to foster as much as previous generations due to the ease of finance and availability of everything we could want right at our fingertips.

It’s crippling us financially, but it doesn’t have to. Derek Sall paid off $116,000 worth of debt before he turned thirty. His biggest tip?  Go live your life! Instead of seeing what everyone else is doing and comparing our lives on social media, go do your own thing.

Other millennials have recommended reducing social media use and thinking about what you spend. Cait Flanders, author of The Year Of Less did a total shopping ban and saved $13,000.  As a financial blogger she had been writing about finance, often told others what to do but wasn’t totally following her own advice. Her shopping ban curbed her spending and showed her how she was wasting her money.

So while it is harder to remain focused and on track with our finances because of social media, it doesn’t have to be that way.

How do you handle the pressure to have a certain lifestyle or buy things because of social media?

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  • As COVID-19 continues to spread, we would like to take a moment to let you know what Financial Spectrum is doing to respond.

    While we haven’t been directly affected with any confirmed cases, we are taking all reasonable precautions to remain safe.Our priorities are:

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