The rapid growth of social media in recent years has been extraordinary. In less than a decade, it has become a central part of many people’s way of life.
Social media has become more than simply a platform for keeping in touch. Now, you can use it to learn new skills, do your shopping, and even market your business. The opportunities this presents are limitless, but they do come with some drawbacks.
Exposure to so many people across the world, both those you know and those you don’t, can affect your perception of yourself and those around you.
In particular, the way social media encourages everyone to share the “highlights reel” of their lives could tempt you to overspend as you compare your own lifestyle with the curated narrative you see online. Indeed, a report from Forbes has suggested that social media could even accelerate “lifestyle creep”.
So how can you be more mindful about your use of social media and ensure it doesn’t affect your financial wellbeing? Read on to find out.
Social media shows everyone at their best, which can cause you to compare yourself to them
By its very nature, social media encourages users to share their best moments, things like holidays, birthdays, new homes, and promotions. You will rarely see your connections sharing their less enjoyable moments, from the banal everyday routines or the disappointments and challenges they face.
It’s easy to forget that the posts you see are a heavily edited version of someone’s life. From the outside, it might look like this person is constantly enjoying lavish days out, exotic holidays, and luxury new clothes and jewellery.
When it seems as though everyone in your news feed is enjoying similarly successful lives, it can change how you see the world and what wealth means to you. It can also subtly influence how you spend your money, particularly as your income rises.
It’s normal for your expenses to rise as your income does
“Lifestyle creep” is the term given to the way that your lifestyle may change as your income rises, gradually increasing your expenses. For example, you might start eating at more exclusive restaurants or buying clothes from more expensive boutiques now that you can afford it.
It’s natural to want to enjoy your additional income as your pay rises, and there’s nothing necessarily wrong with this. But if your expenditure rises at the same rate as your salary, you may find that you are unable to save more towards your future, making it more difficult to achieve your long-term goals.
This can also pose a challenge if your income unexpectedly drops, as you may struggle to cover your regular expenses.
Social media could influence you to increase your expenditure more readily
Though lifestyle creep is a common phenomenon and one that anyone can be vulnerable to, using social media could accelerate the process.
Seeing friends, family, or social media stars sharing their expensive lifestyles could change how you view wealth, persuading you to spend on luxuries that you might otherwise not have considered. Consequently, your regular expenses might rise more quickly than usual.
This can have a negative effect on your financial wellbeing. If you’re spending more of your income on luxury goods or experiences, you may have less to save into your pension or investment portfolio. As a result, your overall wealth could grow more slowly, making it more difficult for you to achieve your long-term goals.
3 ways to protect your wealth from the influence of social media
Fortunately, there are some simple steps you can take to protect your financial wellbeing while still enjoying using social media to keep in touch with loved ones.
1. Be mindful of who you connect with on social media
The first step is to critically review your social media to see who you are connected with. Reducing the number of accounts you follow and ensuring you only follow people who share content that you enjoy can curb the volume of persuasive content you see every day.
2. Limit your use of social media each day
Social media is designed to be addictive, so it’s easy to be sucked into scrolling for just a little bit longer every day. Instead, set a timer so that you are spending a reasonable amount of time on there, which can help you to avoid poring over too many accounts that could tempt you to spend.
3. Set a monthly budget and stick to it
It may not be the most exciting task, but creating a budget for yourself can be a helpful way to avoid overspending. Allocate a certain percentage or value of income each month to treats and stop spending when you reach the threshold. This can help you to avoid spending the money that you would like to save into your pension or investment portfolio.
