It’s undeniable that social media touches nearly every facet of society. From boardrooms to classrooms to bedrooms, the influence of social media is inevitable.
With more than 4.62 billion users who spend an average of two hours and 27 minutes daily, the landscape is teeming with opportunities. It’s not surprising that even companies from the most formal and serious industries have hopped in on this digital revolution to strengthen their social media presence – which you can find out here how they do it.
As more brands appear on various social media platforms, brushing off the temptation of spending more time on these sites has become even more challenging. Countless studies have even stated how constantly using social media impacts the quality of one’s life, including your finances’ health.
So, if you’re interested to know how your digital habits affect your wallet, here’s a brief overview of how social media affects financial literacy.
What Is Financial Literacy?
Financial literacy is the foundation that enables people to use various financial skills to boost their chance of achieving their goals, protect themselves from unsustainable debt, and make decisions that will improve their quality of life.
Furthermore, it isn’t something learned in just one sitting. It’s a lifelong journey that ideally starts early in life and helps you reach your definition of financial independence.
So, how is your ability to make sound financial decisions influenced by your social media use?
- Social Media Encourages The Culture Of Excess Consumption
Studies have shown that social media platforms enable a culture of excess consumption. For instance, it starts with an innocent post you liked from a friend who’s vacationing in another country. The more this friend posts about the food they ate, their activities, and the people they met, the more you feel the wanderlust and jealousy.
In a particular study, 90% of millennial respondents said that social media opens up ideas to compare their wealth and lifestyle to that of their peers. The more they spend their time checking out posts from their network, the greater the feeling of missing out (FOMO). The urge to hop on the latest trend in traveling, beauty, or clothing is a way to satisfy the need to belong.
However, it’s important to remember that the feeling of inadequacy isn’t developed solely from seeing these posts from their peers. A great deal of the conditioning is attributed to how brands capitalize on the algorithms that govern social media sites. Companies spend hundreds of millions of dollars to get their products and brand in front of a targeted audience.
Engaging with a post from a brand or someone from your network about a specific place is information that you can use to deliver more content about it. Social media is built to consider your browsing activities to produce more content similar to what you constantly search for, comment on, or like.
- Social Media Platforms Are Home To Influencers
The emergence of influencers is an excellent way to illustrate how the opinion of peers matters more than that of people in authority or of celebrities. Influencers are highly regarded these days because of the proximity to their audience. Compared to actors, athletes, and models, influencers and their opinion on almost anything has become more valuable because their behaviors are easier to copy. Aside from this factor, they are more approachable, perceiving that their relationship with their followers is authentic.
To illustrate the effects of influencers, hop on any social media app and search for ‘investments’ or ‘personal finance,’ and you’ll see hundreds of accounts that offer financial advice. Observe how many of these social media accounts are actual professionals in finance and investment and not just influencers who suddenly start talking about the latest investment trend.
The Cost Of Financial Illiteracy
The financially illiterate are vulnerable to several pitfalls, such as bankruptcy, poor credit score, and housing foreclosure, amongst other negative consequences. These are just some examples of how one might end up should they continue making poor spending decisions, accumulating unstainable debts, and lack long-term goal setting.
Social media may be used to improve your life or instrumental to the cause of more failures. Setting boundaries and limitations to your social media use may be critical in ensuring you don’t spend outside your budget or intensify FOMO. Try to avoid influencers who don’t have the competency and background to give financial advice. Additionally, as with anything you see on the internet, take everything you see and hear with a grain of salt and do your due diligence before following anybody’s financial and investment advice.