Social media is the new way most of us socialize, but it can also be one of the worst enemies of your budget. In the past, the social pressures of keeping up with the Joneses were typically contained to your neighbors and your neighborhood. Thanks to social networking platforms such as Facebook, Instagram, and Twitter your neighborhood has now turned into the entire world essentially. Here are 4 ways that social media is blowing your budget.
1. The ads know what you want
Marketing wizards have cleverly been working behind the scenes to discover the things you like by using algorithms to track your interests or spending habits. The result is that you are shown ads that often match the things that you would typically seek out to buy. For example, maybe you follow a lot of social media accounts that are Disney themed. As a result, you are shown ads for Disney World or the Disney Store or any number of Disney themed paraphernalia. This creates a temptation to buy things that you would normally not seek out because you knew you couldn't afford them.
2. Don't fall for the fantasy
The main goal on social media sites for most is to get likes or collect followers. Oftentimes, social media accounts are created specifically for the sole purpose of cultivating a following for the purpose of monetizing the account in some way. When we see someone post a picture of their perfect vacation or a beautifully presented plate of food, it makes us think that we are not living our best life and we should seek those experiences as well, which often leads to overspending. It's important to remember that what you are seeing on social media is often the highlight reel which shouldn't be compared to your behind the scenes.
3. Your brain chemistry is working against you
There is evidence that supports the idea that getting likes on social media has the same effect on your brain as eating chocolate or finding money. A study published in Psychology Science suggests that the areas of the brain that are activated by getting likes on a photo posted were associated with the brain's reward circuitry in teenagers. In the same study, they would often like pictures that had more likes versus pictures with fewer likes, even if it's the exact same picture. This is strong evidence that this can lead to an addiction to creating posts that get more likes, which can also often lead to overspending by purchasing props for images, a better camera, anything to get the desired effect.
4. Social media can affect financial markets
In 2013, a fake tweet from a hacked AP account said that there had been explosions at the White House and that the president was injured. The result was that $130 billion was wiped off the value of the S&P. Similarly, a man named James Alan Craig used Twitter to make false statements about two tech firms with the intent to buy the shares when the prices fell. These are just a few examples of how social media has an impact not just on personal finances directly, but indirectly as a result of false claims or unscrupulous business practices which can affect stock prices.
Social media can be an entertaining and fun way to pass the time. Being aware of the pitfalls and trappings of social media can help you stay on budget and keep your finances in check.