How does social media influence your financial decisions?

Most of us spend hours scrolling through our social media feeds each day – a place where we only see the highlight reels from the lives of those we follow. And while this may seem harmless, it could be seriously impacting our financial wellness.
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Comparison is the thief of joy – and, it seems, good financial decisions. Just think about it; how many times have you purchased something after seeing it being advertised on Instagram? Alternatively, how often do you scroll through your Facebook News Feed and feel jealous because yet another one of your friends has gone on an expensive luxury holiday?

Even if you think you’re savvy with your money, the truth is that social media could make you spend more without you even realising it. Fortunately, there are things you can do to break the cycle – and even use social media to help you manage your money better.

Why social media makes us spend more

Social media is a great way to stay in contact with our friends and family and see what they’re doing – especially during the pandemic. However, the problem with social media is that it ultimately urges comparison. Many of us curate our profiles, and we only show the highlights from our lives – such as the big promotion, the fancy new car, and the exciting trip we’ve taken.

This can create a dangerous illusion that others are somehow better off (and are therefore happier as a result), which can influence us to do the same in order to ‘keep up with the Joneses’.

Say your friend posted pictures of themselves sunbathing in Bali, and you’re in the UK where it’s raining as per usual. It’s natural to feel a bit envious, and you may even start looking at flights or holidays that you can’t afford. It’s okay to admit it; we’ve all been there. In fact, about 49% of people aged between 23 and 38 admit to having spent money on experiences because of social media1.

The effect of influencer marketing

However, your friends’ pictures aren’t the only things to blame. Social media platforms are designed to sell products and services to you – they’re not just a way for you to send birthday wishes to family members you never see or have a nosey at what your old classmates are doing now.

There are influencers whose job it is to sell their lifestyle – so, it goes without saying that they want you to spend your money on the things they’re promoting. Otherwise, they simply wouldn’t make a living. These adverts (because that’s what they are; just ads) are everywhere on social media and it’s very hard to escape them when they’re constantly appearing in your feed.

In addition to influencers’ promotional posts, social media is also full of targeted ads directly from brands. Ever visited a website, put an item in your cart and abandoned it, then noticed ads featuring that item all over your social media? Yep, that’s very much deliberate.

Not only that, but every time you engage with a social media post, you indirectly send signals to the platform that you’re interested in this type of content, and they will advertise whatever you like directly to you, increasing the pressure for you to consume and spend money. And if you’re not careful, you could only be dropping your hard-earned cash on things to impress people you may not even know. Over time, this habit could hurt your finances.

How to avoid the negative financial impact of social media

Realising that you’re guilty of buying something you saw on social media just to impress others? Luckily, there are many ways to lessen the impact that social media could have on your finances. Here’s a few things you could do to take back control.

Use social media less

This is the most obvious solution, but it can be the hardest - especially if you scroll through your feeds first thing in the morning and before you go to sleep. But if social media is making you feel bad about yourself, it’s worth taking a break. And when you spend more time having fun away from your screen, you’ll notice that you feel more fulfilled. So, consider installing app blockers on your phone or even just leaving it in a drawer while you go for a walk. That way you’re not tempted to check what you’ve been missing out on – and trust us, most of the time, you don’t miss much!

Give yourself a reality check

When you see something on social media that stirs up feelings of jealously or inadequacy, remember that things aren’t always what they seem. You may see your friend’s designer brand handbag being displayed proudly on her arm in her newest Instagram picture, but you don’t see the extra shifts she worked, or the scrimping and saving she did to be able to afford it in the first place.

Similarly, not every influencer can keep up with the luxury lifestyle they’re selling to their followers. In fact, many admit that when they do buy items to show off on their profiles (such as clothing), they don’t always keep the items they purchased. Many influencers are also gifted items and experiences in return for them being shown on their social media profiles or are given gift cards or allowances to make certain purchases.

Change up your feed

The next thing you could do is unfollow people who make you feel rubbish about yourself. Just like Marie Kondo, famous organising consultant, says: “If it doesn’t spark joy, get rid of it!” This means you may have to be a little brutal and mute or remove any people that post triggering content. Not seeing their posts should instantly remove some of the buying pressure.

Can’t bring yourself to remove people? Try to make your feeds more positive by following accounts that inspire or empower you. Social media isn’t inherently bad – it all depends on how you use it. For example, instead of following influencers who sell you the latest fast fashion items, why not choose those who embrace the latest trends with what they already have in their wardrobes and see if you can do the same with yours? Or why not follow financial influencers who inspire you to make better decisions with your money when it comes to bigger purchases, like cars and electronics?

Be patient and plan

If you don’t want to unfollow your favourite brands or influencers, then it may be wise to work on your money habits. Social media can promote impulse buying, so with that in mind, next time you’re tempted to make a purchase, try to wait a few days or even weeks before splashing the cash – you may find that you’re not interested in it anymore. You could also set a budget to try and limit your spending or even put your savings into an investment account (like a Stocks and Shares ISA) and see if it grows. You can then use that money to buy something you really want. 

Ways social media could help your finances

Social media can have serious repercussions on your finances if you’re not careful. However, it could also help you take control of your finances. Here’s how:

  • You can nab deals on used items: Need something in particular? Before buying new, it could be worth checking your local Facebook Marketplace for it. You can find all sorts of deals on used items – or even new items that people have purchased and changed their minds about.
  • You can find great discounts: With social media, there’s no need to subscribe to newsletters to uncover sales or exclusive coupons. If you follow your favourite brands, you may be able to find offers that help you to save money on purchases you were already planning to make.
  • It can teach you about money: If you follow the right people, you could learn a thing or two about managing your money better. There are tonnes of influencers who focus on teaching their followers how to budget or invest your money wisely thanks to their own experiences.

Remember; at the end of the day, social media is a great tool that keeps us connected with others. Just make sure that you’re taking what you see with a pinch of salt and not as a guide for how you should live your life. Save your money for the things that will bring you sustained contentment, not unnecessary worry or a temporary hit of dopamine.  



The tax treatment depends on your individual circumstances and may be subject to change in the future.

Please remember the value of your investments can go down as well as up, and you could get back less than invested. 

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