Is ‘financial FOMO’ sabotaging your savings?

If you’ve ever had a bad case of FOMO, you’re not alone. The problem: It could hurt your financial security.

From viral TikToks about overnight cryptocurrency fortunes, to friends bragging about their luxurious 10-step skincare routines, FOMO has become commonplace. Surveys show that social comparison plays an increasing role in everything from overspending to risky investing behavior.

But when fear or anxiety fuels your financial decisions, mistakes tend to follow. Understanding how to spot (and stop) financial FOMO may be the key to putting your savings on the right track.

“Fear of missing out” — also known as FOMO — is the feeling of worry that others have more rewarding or exciting experiences than you. FOMO may cause you to go out, take certain trips, or buy certain things to keep up with your peers, even if you don’t want to.

Financial FOMO, specifically, is the fear of missing out on money-related opportunities. For example, you may jump into trendy investments, overspend during sales, or rush into making big financial decisions because of the perception that others are doing so and benefiting.

So what causes FOMO? Experts say the cause can be caused by a variety of factors, but social media often plays an important role. Half of the participants recently Empowerment scan He said that seeing what others are buying on social media motivates them to spend money because of the fear of missing out.

“As a society, we feel very uncomfortable talking about finances, and this can cause people to spend excessively to keep up with their friends or appear on social media, rather than being honest about their finances and limits,” said Julie Peckham, financial education officer at Rockland Trust Bank.

Plus, it’s easier to give in to temptation when your social media channels are filled with ads, gadgets, travel content, concerts, exclusive dining experiences, and more.

However, the short-term satisfaction that often comes with impulse buying can lead to long-term financial struggle, according to Beckham.

Read more: Behavioral Finance 101: 7 Ways Your Mind Can Sabotage Your Money

When your spending decisions are driven by fear of missing out, rather than your true needs and values, it can derail your long-term goals and sense of financial security.

Some of the ways financial FOMO can negatively affect you include:

• Impulsive spending on so-called deals: FOMO makes limited-time sales and social media necessities feel urgent. So you end up buying things you didn’t plan on, taking money away from your specific savings goals.

• Chase trends instead of your budget: When you see others improving their lifestyle, it’s easy to rationalize spending that you can’t really afford. This causes a budget creep, as your monthly spending starts to increase while your savings shrink.

• Take on unnecessary debt: FOMO can lead to using credit cards for purchases that you can’t afford just to get involved. And if you carry a monthly balance, double-digit interest rates cause your debt to grow faster than your savings.

• Risky investments that backfire: Seeing others “making big gains” can push you into volatile or speculative investments. But meme stocks and quick cryptocurrency investments only work for a few people — and by the time everyone is talking about it, it’s usually too late to capitalize on the hype. If the market turns, you lose money that could have gone toward tried-and-true savings and investment options.

• Lack of commitment to long-term goals: FOMO shifts your focus to what others are doing instead of what is right for you. These distractions may cause you to lose focus on your priorities and long-term plans.

However, a little FOMO isn’t always a bad thing. The same Empower survey found that more than 15% of those who experienced financial FOMO said it inspired them to invest, while others said it made them open a new savings account (14%) or improve their debt repayment strategy (13%).

The key is to channel your financial FOMO into positive money habits. For example, watching your peers achieve big accomplishments (like buying a house or financing a college education) can prompt you to take your planning seriously, rather than putting it off. Your friend’s once-in-a-lifetime trip to the Maldives could inspire you to cut back on discretionary spending and start taking your travel savings fund seriously.

Read more: How do I pair travel credit cards with a high-yield savings account to maximize family vacations

If you’re struggling with financial FOMO, the first step is to reframe the narrative in your mind. If you condition yourself to be disappointed every time you see something you can’t afford on social media, you may be neglecting all the things you can do and the financial goals you’ll achieve if you stick to your budget.

Beckham said her biggest piece of advice is to create an intentional spending plan. “Starting early, saving, and budgeting consistently can pay off and put you in a position to better evaluate what additional expenses you can approve,” Beckham explained. “It feels much better to save up for a year to go away than to go away and spend the next year paying for that vacation, plus benefits.”

Creating a values-based budget can help you align spending decisions with the things and experiences that really matter to you. When you are tempted to make a purchase, ask yourself how this purchase will fit into your value system. If it doesn’t, you’ll feel better about skipping it.

If you’re easily tempted by what you see on your social media pages, set yourself up for success by paying attention to the type of content you consume.

Consider adjusting your account settings to limit the number and type of ads you see in your feeds, and setting daily screen time limits to reduce the time you spend scrolling. You may find it easier to avoid financial FOMO if you can’t see what you’re missing.

Refusing an invitation is not a crime. If you’re asked to join an expensive dinner or weekend getaway with friends and it doesn’t fit your budget, learn to be OK with saying “no” for the sake of your financial well-being. Having open and honest conversations with your loved ones can help them better understand why you’re missing out on a particular outing and may also prompt them to come up with more affordable alternatives so you don’t have to miss out.

Read more: How the ‘buzzing budget’ trend can help you save more money