Social media now takes up a significant share of our day, and as we spend more time online, we also tend to spend more money online. It pays to be mindful of how our browsing habits affect our hip pocket.
Much of this spending happens without us really noticing. Some of it is conscious, like actively researching brands and products. A lot of it is subconscious, shaped by the advertisements and content we’re served without asking for them.
1. Social Networking to Selling
Social media platforms have shifted from pure social networking to genuine marketplaces. Facebook now functions as much as a place to buy and sell as it does to connect with friends and family, and Instagram has followed a similar path, evolving from a photo-sharing app into a place people actively go to research products and services before buying them.
2. Easy Social Shopping
The purchasing experience on social platforms has become sophisticated and seamless. Buy now, pay later services such as Afterpay make it even easier to purchase a product or service through instalments, lowering the perceived barrier to spending in the moment.
3. Hard to Resist Targeted Advertising
While users can search for products and purchase online at will, the data collected from social platforms also allows marketers to target individuals based on their demographics, interests and online behaviour. Have a look at the ads that appear when you next log in. Chances are they’ll be relevant to you.
This practice isn’t a secret, but it can still be surprising, and even unsettling, how tailored this advertising can be. With advertising pinpointing your real and anticipated needs, it can be hard to resist buying, and once you’ve responded to an ad, you’ll typically see more of the same, keeping you in the spending loop.
4. Influencing Our Buying Behaviour
‘Keeping Up With The Joneses’ is alive and well on social media, where people compete for likes with their most impressive lifestyle moments. But it isn’t only envy that induces us to spend. We turn to those we trust when making decisions, which is why seeing friends, family and ‘influencers’ use a product or service and have a positive experience acts as social proof, nudging us towards the same purchase.
5. Fear of Missing Out
FOMO is a real phenomenon, and social media can make it worse, making it tempting to spend on the latest gadgets or lifestyle trends. Comparing yourself to others can create anxiety and induce spending just to ‘keep up’. There’s a growing counter-movement towards JOMO, the joy of missing out, and for your hip pocket, JOMO tends to serve you far better than FOMO.
Watching your spending when it comes to social media can be challenging. If you’re concerned about your spending, set a budget for the amount of online shopping you’re comfortable with, and keep track of your purchases to make sure your spending isn’t coming at the expense of your day-to-day needs or your longer-term financial goals.
Just having a greater awareness of how social media influences your behaviour will help you resist the subtle enticements of social marketing. If you’d like a clearer picture of how your everyday spending fits into your broader financial goals, explore our wealth planning advice or speak with a Capital Partners adviser about managing your money.
This article contains general information only and does not constitute personal financial advice. Your circumstances are unique. Speak to a qualified adviser before making financial decisions.
