Do people who use social media spend more than others?
An inaccurate perception, called a visibility bias, researchers suggest is changing our consumption habits. We only post on social media expensive things, dinners, and experiences, and we don’t promote the mundane, everyday, saving. When our friends see us post, they are inclined to spend more. “It’s kind of the domino effect triggering other people into doing something. It doesn’t have to be that you feel pressured, it’s just like they learn from your activity, your consumption,” say the researchers.(1)
That is a fascinating side-effect of social media. We have a dear friend who travels the world because it is on his bucket list. He takes photos of the most amazing places, doing the most interesting things. Indeed, we find ourselves also wanting to travel more. Do you ever find yourself compelled to spend more after you consume social media?
I know we have an interest in social media among the three generations of our family so that we can stay in touch with the younger generation. In a similar story, from Barron’s, that younger generation is getting more financial help from us than any other generation—ever—and that is not in anyone’s best interests.
Barron’s says parents’ help starts small, with cell phone payments, health insurance payments, car insurance payments, then maybe it’s a down payment on an apartment, or a home, or a car. The wedding—don’t forget the wedding they all get (deserve?). Before you know it, parents are helping with the divorce, with the second home, with the defaults on the loans (student loans anyone?). The dollars add up to twice what we tuck away for our own retirements.
“Nearly 80% of parents give some financial support to their adult children—to the tune of $500 billion a year, according to estimates by consulting firm Age Wave. That’s twice what parents put into retirement accounts, according to a 2018 survey from Bank of America Merrill Lynch and Age Wave. Almost three-quarters of respondents acknowledged putting their children’s interests ahead of their own retirement needs.”(2) Read the full article here.
Perhaps the kids need the parents to “pull the plug” on the cell phone, so they can’t spend so much time on the social media, and be tempted to spend the money on an item they don’t need. Instead, perhaps the “tough love” conversation is past due.
We live in interesting times. If you’ve any friends who mention these issues to you, don’t be afraid to talk to them about it. We’re helping a number of folks work through similar issues—all of whom are wonderful people—and all of whom will feel empowered and fulfilled on the other side.
Karl Frank, Certified Financial Planner ®, MSF, MBA, MA, is the President of A&I Financial Services LLC, a local business that specializes in wealth management, insurance planning, and retirement planning. Karl cares for business owners and the businesses that care for them. Learn More about Karl.