Tag Archives: shopping

Four ways social media affects our spending

Social media could be influencing us to spend impulsively!

Can social media use be linked to spending? Research shows it can. For example, one study found that social networks such as Facebook and Instagram can motivate impulsive buying behaviours.[1]

But just exactly how does social media affect our spending?

1. Advertising

Sites like Facebook and Instagram have evolved from social networking platforms to powerful advertising tools. (I remember fondly when Instagram was purely a photography site… sigh!)  We only need to look at our social media feeds to realise how businesses use targeted advertising to expose us to brands, products and services. Targeted posts are effective at getting us to spend because they’re typically developed based on our demographics and even our behaviours.  They aren’t called ‘influencers’ for nothing!

2. FOMO!

Social media creates a tendency among users to compare their lifestyle to those of others.  You know, those beautifully curated feeds that make you feel like a complete failure at nearly every part of your life? your house? your wardrobe? your socials? This comparison can trigger a ‘fear of missing out’ or FOMO, leading us to buy and consume just to fulfill the urge to keep up with everyone else.  Leave that behind!

3. Encouraging imitation

Images of products or aspirational lifestyles posted on social media by people we respect or admire might influence us to spend unnecessarily or indulgently.  Be wary! This can happen when we look to them (celebs, sports starts, influencers etc) for cues or guidance when we don’t know how to act and simply copy what they’re doing. Psychologists call this social proofing.[2]

4. A seamless shopping experience

Social media platforms can also encourage spending by also providing a seamless shopping experience. As an example, Facebook enables retailers to sell on the platform itself, and Instagram allows links to products and services mentioned in posts so users can purchase them online. This makes it extremely easy to spend!

I’ve been sucked in with those great outfits pictured on Insta, that arrive from China and would be hard pressed to fit a primary school aged child, let alone the curvy woman who ordered them!  And getting your money back… seriously!!!

Making smart choices

Social media can help us make better choices by exposing us to more products and services and enabling us to learn about other people’s experiences using them. It can also save us a fortune if we can compare retail vs Gumtree or Ebay and know what we’re looking for and can compare what’s in front of us.

But it can also influence us to spend unnecessarily or impulsively.  So, be aware!

By setting financial goals, you can make smart choices with your money. Your professional financial adviser can help you get started by creating a plan and budget to help you secure your financial future.

 

NOTES

[1] Aragoncillo, L, 2018, ‘Impulse buying behaviour: an online-offline comparative and the impact of social media’, Spanish Journal of Marketing, accessible at: https://www.emeraldinsight.com/doi/full/10.1108/SJME-03-2018-007.

[2] Psychology Notes HQ, August 2015, ‘What is the Social Proof Theory?’, accessible at: https://www.psychologynoteshq.com/social-proof.

Keeping up with the Jones

Do you have a little envy going on?  These days, everything from Order Envy (your friend’s meal choice looks way better than yours) to outright covetousness over their assets seems to be in vogue.  You may know it as that feeling when their gleaming new ride pulls up next to your perfectly operational and completely reliable, but 2005 model Corolla, and suddenly you feel a little lame.  Or you’ve been toting that fabulously comfortable, but rather battered handbag around a bit longer than most, while your friends have had a few sparkling new upgrades.  The Kardashians have even decided that you should really emulate them and based an empire on it!

It may not even be that you have a desire to actually  have what your friend or Kim or Khloe or Kourtney has—but what some behavioural economists call “image motivation,” which in layman’s terms, is simply the desire to be perceived as successful by others.

Basically, there’s nothing wrong with this—unless of course it encourages you to spend and live beyond your means. And that’s where there’s a problem.  It’s also always good to remember, that just because someone has it, doesn’t mean they can actually afford it.

You’ve likely heard the very common expression that someone may be trying to “keep up with the Joneses.”  Neighbours outdo each other with bigger and better renovations and newer and sportier vehicles while other look on and giggle.   You may however like to see where it’s all at for the original Jones…

The fabulous Wyndclyff Mansion built in 1853 in Rhinebeck, New York by Elizabeth Schermerhorn Jones originally inspired the phrase, and it’s now a crumbling ruin in total disarray.  So if you have a touch of the green-eyed monster over some of your friends places or belongings, perhaps you could hang a picture of what the Jones estate looks like now to give you a little comfort and perspective.

The house ended up with a number of owners who couldn’t afford to maintain or repair it, and it has now been abandoned for years.

So the best advice I can give, is to take the home’s fate to heart and use your desire for a little prestige as the fire to aid you in making your own individual, solid financial decisions.

Funnel the money you would have spent matching your mates into a savings or investment plan instead.  Chances are, by investing instead of spending, you’re way more likely to end up ahead!

Women, Money & Shame

Most women I know are pretty excited to show off a new purchase – the fabulous new handbag, a great new pair of shoes, a piece of jewellery or that amazing dress – but when it comes to sharing our true financial status – that’s something that rarely gets a mention!

Being honest about what we have or don’t have, is part of cleaning up our financial lives.

If there’s levels of personal debt that we’re uncomfortable with, it’s not often we speak of it,  Shame tends to come in first place.   When we’re invited out, we’d rather not tell someone we can’t afford that particular restaurant or outing.   At times, our need to fit in is greater than our financial circumstances, and so we lie both to others and ourselves and go anyway, placing ourselves further into debt.

It’s time to own what is the truth. There’s nothing embarrassing about saying, “I’ve put myself on a budget these days, I want to save for a holiday and I’m watching what I spend.”

Have you even got a goal to work on that’s more important than your immediate want to spend?  It’s much easier to say, “I’ve got a trip to Europe lined up, so I don’t want to spend that kind of money.”  “I’m paying off the credit card…”  “I’m trying to get the mortgage down…”

The story we often tell ourselves, is that ‘we can’t afford it.’

It’s actually all about how you choose to spend money. Your friends are highly likely to respect you more and some may even start watching where their money is going too.

You might just start a savings revolution amongst your buddies!  Why not give it a shot?