FOMO Spending and How to Avoid It

February 27, 2019 · 5 minute read

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FOMO Spending and How to Avoid It

The fear of missing out can play a major role in influencing how people spend their money, at the same time often motivating them to buy things they can’t actually afford. This modern form of debt, known as FOMO spending, is hard to avoid if you feel peer pressure to live outside your means.

When it comes to what are millennials spending money on—there’s no single answer. But Millennials are more likely to spend money on comforts and conveniences than other generations. Things like Ubers, coffees, and fancy dinners with friends, which can add up quickly if you’re not paying attention or are splurging to keep you with your friends’ lifestyles.

Avoiding FOMO spending doesn’t have to mean giving up every nice dinner or outing, but you should work within your budget and try to become comfortable saying no to overspending.

Wait, Back Up—What Is FOMO?

FOMO, or Fear Of Missing Out, is a feeling of anxiety someone might experience about not being part of an event that is happening, usually triggered these days by seeing social media posts from friends enjoying an activity, and wishing you were part of the fun. While it’s certainly true that businesses employ FOMO tactics to get you to buy things, it’s not just a sales strategy.

Nick Hobson Ph.D, says “While the fear of missing out has always been there, the explosion of social media has launched our young people headfirst into the FOMO experience.” For many people now, social media is their main community lifeline, and having the impression that you are not part of the “in” group is enough to trigger a stress response like FOMO.

FOMO Spending to Keep Up with Peers

A 2018 study from Qualtrics and Credit Karma found that almost 40% of about 1,000 Americans ages 18 to 34 who were surveyed said they have gone into debt just to keep up with their friends’ lifestyles. This is FOMO taken the the financial extreme.

People are fighting FOMO by spending more than they have on things like travel, clothes, food, and going out. Whether it’s bigger “once-in-a-lifetime” experiences you can’t miss out on like trips, music festivals, or weddings, or even smaller events like dinner and drinks, FOMO spending can really add up over time.

According to the study, 27% of millennials feel uncomfortable saying no when a friend suggests an activity that they can’t afford. Nearly 75% of those who said they have gone into debt due to FOMO also said they’ve kept it a secret.

Money is one of the most difficult subjects to broach with friends, but also one of the most important to discuss. FOMO spending often stems from peer pressure to buy something you can’t afford so that you can still participate in a group.

If you are scared of being left out, and you become stressed, that fear of missing out on quality time with friends or family can add up to extra spending and debt.

How Can You Avoid FOMO Spending?

Reining in FOMO spending can be hard, especially if your friends are truly living at a different income level than you. But odds are, some of your friend group might be in the same situation, and are overspending in an effort to impress. Avoid FOMO spending by finding which of these tips works best for you:

1. Suggest Free Alternatives

The first way to conquer FOMO spending is to simply stop spending! While it’s of course not that easy, why not come up with a free alternative when a friend suggests plans?

Meeting for up for a $5 latte at a cafe could just as easily turn into sitting on your couch with a homemade cup of joe. Friends want to go out to the movies or the mall? Suggest visiting a museum on a day they offer free admission instead.

2. Limit Your Card Usage and Carry Cash

Limiting your spending on credit or even debit cards and making the majority of your purchases with cash will drastically impact how often you impulse spend on something when the feeling of FOMO creeps in.

If you only withdraw a certain amount before heading out to dinner or the bar, you’ll already have a pre-set budget that you know you feel comfortable spending.

3. Create a Budget and Stick to It

Along those same lines, creating a monthly or even weekly budget will may also help you cut down on FOMO spending. Your budget can, and should, include money for savings or big-ticket items like travel you know you have coming up.

Not sure where to put the money you are saving? Save, spend, and earn all in one product with a SoFi Money® cash management account.

By putting some money away, and then calculating how much “fun” money you have left over after bills, you’ll know exactly when you’ve reached your limit. While a budget might not help you eliminate FOMO spending altogether, you’ll at least give yourself more constraints if you limit yourself to a specific spending amount.

4. Lower Your Social Media Exposure

The endless scrolling on platforms like Facebook, Twitter, and Instagram offer some instant gratification, but social media is one of the main contributing factors of FOMO.

Targeted ads, influencers touting products, and even your own friends’ posts can all add up to spending money so that you don’t feel like you’re missing out. Trade in your laptop or phone time before bed for a good old-fashioned book or movie.

If You Must Spend, Still Plan Ahead

You won’t be able to avoid FOMO spending all of the time, so it’s also important to have a strategy in place for how you want to make the best use of your time and money if the feeling kicks in.

Delayed Gratification

If you have a sudden urge to buy something because of FOMO, try instead to write the item down, whether in a Notes app on your phone or even just a physical piece of paper, and come back to it 24 hours later.

This will help you avoid impulse purchases just because something is on sale, for instance, and evaluate in a day if it’s something you still really need.

Buying in Person

Nothing crushes the FOMO spending feeling more than forcing yourself to trek to an actual physical store to make a purchase.

Too many times, FOMO spending happens when you are online shopping and the ease of delivery right to your door doesn’t make you think twice about your purchase.

Introducing SoFi Money®

The study mentioned above also reported that two-thirds of millennials regret spending more on social situations than they planned, and one-third do not think they will be able to sustain their lifestyle for a year without going into debt.

This is where SoFi Money comes in. You’ll be able to see the big picture on your spending and keep tabs on your cash flow. SoFi Money is a cash management account that makes it easy to know where you stand and what you spend.

Put a stop to FOMO spending with SoFi Money!


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