What’s FOMO and YOLO really costing you?

You know that new gadget in the market is going to cost you over a month’s salary, but you join the bandwagon anyway
with a fearless swipe of your credit card, thinking you can deal with the financial repercussions later.

Because you have this fear of missing out (FOMO).  You only live once (YOLO), after all.

This mantra is a favorite among millennials who don’t think twice on splurging on immediate experiences or commodities that instantly give pleasure just to keep up with peers or make every episode in their lives Instagram-worthy.

While being gutsy to squeeze the juice out of life every day without regard for the future is admirable to some extent, this YOLO/FOMO culture has altered attitude toward banking, saving and retirement planning.

This cultural sensation gravitates away from saving for the long term and toward lavish spending on fashion, food, holidays and travel, concerts, extreme sports and other hobbies in order to live in the moment. But how much is this desire for social media validation really costing young people?

A recent study on millennials and social spending has illustrated how such mindset is taking a toll on the younger generations’ spending habits and financial health.

The survey, commissioned by Credit Karma, an American multinational personal finance firm, shows that nearly half of millennials have difficulty saving because they overspend on things or adventures that will help them keep up with their friends.

According to the survey, 39% of millennials spent money they didn’t have and went into debt out of fear of missing out on something memorable with their peers.

It also shows that 27% feel embarrassed saying “no” if a friend suggests an activity they cannot afford. Of those who admitted going into debt from FOMO/YOLO, 73% said they kept it a secret.

A closer look at this behavior pinpoints social media as the driving force. Social media platforms like Instagram and Facebook have increased one’s awareness of what others are doing, thus compelling many to keep up with the Joneses by making impulsive financial decisions and behaviors. Psychologists also note that many use the YOLO philosophy to justify such irrational behaviors.

But there is a silver lining: now that we understand how FOMO and YOLO come with a steep price tag, it is possible to break the bad habit of overspending. Between YOLO and FOMO, there is room for some balancing act and rebuild one’s financial house for the future.