5 Easy Ways to Avoid Financial FOMO
“FOMO,” which is shorthand for Fear of Missing Out, can affect people of all ages. It happens when you try to keep up with what others are buying, where they’re traveling or what they’re doing, even if you can’t afford it. It’s the modern equivalent of the old phrase: Keeping Up with the Joneses. In other words, it’s overspending caused by comparing yourself to others. And it’s an easy (and fast) way to end up with debt that’s hard to manage. Here are several ways you can avoid financial FOMO:
Set Financial Goals
When you don’t have a plan for where your money should go, it’s too easy to let it slip away on random purchases or activities. Before you know it, you’re struggling to make it to your next paycheck and wondering where your money has gone. That’s why it’s important to set realistic financial goals and work toward achieving them. One goal we recommend for everyone is saving 3-6 months of living expenses in an emergency fund, which can help minimize your reliance on credit cards.
Be Honest About Your Limitations
If friends and family pressure you to spend money you don’t have, don’t feel obligated to comply. Be honest about your financial limitations. This is where having goals comes in handy. Explain that you are working hard to achieve certain financial milestones and that those goals are your primary focus. That should be enough to lessen the pressure and possibly even inspire them to pursue goals of their own.
Be Selective with Social Media
Social media is a fun distraction and an easy way to stay in touch with faraway friends and family. But if you’re not careful, it can also push you to spend more than you should. Two recent studies show social media is having a negative effect on millennials’ financial status and mental health. A study conducted by Charles Schwab shows nearly half of all millennials have spent money based on what they see on social media. And a separate study conducted by Fidelity finds 2 in 3 millennials believe social media negatively impacts their financial health.
If the accounts you follow are posting things that make you feel like you need to spend money or rack up debt to keep up with their vacations, wardrobe or travel, it’s time to unfollow.
Avoid Unrealistic Comparisons
One of our favorite expressions is “Comparison is the Thief of Joy.” Comparing yourself and your life to others is a sure way to feel like you’re coming up short. Focus on your life, your goals and your accomplishments, and try not to concern yourself with what others are doing (or buying). It’s not always easy, but you’ll feel better about yourself, and your finances, when you stop the constant comparisons.
Adopt a Cash-only Lifestyle
Financial FOMO can quickly make wants seem like needs. Rather than relying on credit cards to make impulse purchases, adopt a cash-only lifestyle instead. It’s much easier to control your spending when you have a finite amount of cash and don’t carry credit cards for back-up. And using credit cards for everyday purchases without a plan to pay off the debt can quickly cause it to spiral out of control. If you’ve gotten in over your head with credit card debt, our free financial review can help you get back on track.