- Phone Bill
- Car Payment
- Social Media?
Yes, we know, social media as a monthly expense seems insane! But it’s creating an environment where wallets are getting thinner and credit card debt is growing. Snapchat, Facebook, Twitter, Pinterest and Instagram are not just a massive part of our day to day lives – they are also a major way for companies to get us to spend more money.
If you think about it, today, you go on Insta’ to see your sweet little baby niece’s birthday photos and end up buying a pair of Ray Bans, shoes or lipstick or a million other products. But how does it work? How exactly are companies peddling so much to us on socials?
Here are the top two ways social media sites cause you to spend more money:
1. They are sending you personalized ads
And It’s Working!
Targeted ads are the money-making tool of the century. But what exactly are they? What happens is that companies pay social media sites hundreds of thousands of dollars to have their ads sent to just the right consumer. These sites, like Facebook, use your age and demographics to promote products they know you will want. Even if you don’t really need them.
Plus, they stalk you!
Remember when you clicked on that ad for that thing, then got ads for it EVERYWHERE you went? Tracking algorithms like cookies are hidden behind almost every site you are on and they follow every little thing you do, hoping to sell you more and more stuff. Even if you are just thinking about buying something, The New York Times wrote that “trackers are now so sophisticated that they can see when you are thinking about buying … so they tell the ads to chase you around and hound you to make the purchase.” Creepy, right?
2. They create social pressure
Peer pressure has never been more tangible than in the digital sphere. You see her with those impossibly-perfect-probably-fake lips or eyelashes or him on a European vacation with an outfit that costs more than your entire rent. Because let’s be honest – we use social media to show off the most perfect, beautiful and often very expensive moments of our lives, which usually leaves others wanting our stuff and us wanting theirs.
One study researching the effects of social media on our spending habits found that “nearly 90 percent of millennial respondents say social media creates a tendency to compare their own wealth or lifestyle to that of their peers.” After all that comparison, the study says that “60 percent of millennials report feeling ‘inadequate’ about their own life.” Get ready for this last one.
57 percent say that they spent money they had never planned to.
It doesn’t stop with one purchase either. There is always something else – always that one last buy before we get serious with our budgets, right? While social media is amazing for a million reasons, it also creates an extremely aggressive consumer environment. It’s like being trapped in a never-ending mall with hundreds of salespeople and ambassadors telling you that you need to Buy, Buy, Buy! Thankfully though, there is a way out.
How to not get caught spending on social sites
Well, it’s hard to admit, but there are a few things we can change about our habits to overcome social media advertising manipulation.
- Let go of FOMO – The Fear Of Missing Out is real. But – so are our bank accounts.
- Don’t buy impulsively – Sites make it way too easy to do one-click buying. Instead, wait overnight and if you decide you still need that product in the morning, then buy it. Don’t let the advertising companies trick you into impulse purchases that only hurt your wallet!
- Follow financially-healthy users – It isn’t all bad! Following genuine creators that help you with your financial goals will make you feel much better than Kim K with #sugarbearhair (seriously, don’t buy it). Having some helpful financial reminders pop up as you scroll through expensive clothing and targeted ads can do wonders in mitigating the amount you spend on items you don’t need.
We love social media for the endless creative content it produces for us. We are instantly connected to so much and can share just as much. If you have a passion for the growth of the social media industry, your involvement doesn’t stop at scrolling through your favorite apps. The ‘Demand Social’ portfolio allows you to invest your money directly into global social media companies, instead of “stuff” you don’t need. Remember that social media is a powerful tool and this may be a way to use it to your advantage. Schedule a video conference with one of our experienced advisors today.
This report is a publication of Demand Wealth. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change.