It’s no secret that the powerful influence of social media can cause people to spend impulsively, but that may now be amounting to tens of billions of dollars of extra spending per year.
Over the last 12 months, U.S. adults have spent $71 billion on impulse buys based on what they saw on social media, according to a new Bankrate survey. (That’s more than the gross domestic product of countries like Slovenia, Ghana or Jordan.) Over half (57 percent) of those impulse buyers regretted at least one of their purchases.
As Americans feel influenced by products seen on social media, they indicate that it presents an unrealistic picture of wealth and success — more than half (57 percent) of social media users say people post to look more successful and 51 percent of users say social media promotes unrealistic lifestyles.
Keep in mind that what you see on social media isn’t always realistic. That refers to your friends’ posts and perhaps rings even more true for influencers. We’re conditioned to want to put our best foot forward, but keeping up with the Joneses can land you in debt. And buying whatever you see in that perfectly posed photo probably doesn’t contain the key to happiness.— TED ROSSMAN | BANKRATE SENIOR INDUSTRY ANALYST
Bankrate’s key insights on social media
- Most people who have impulsively bought items seen on social media have regrets. 48% of social media users say they have made an impulse purchase of a product they saw on social media, and 68% of those people say they regretted at least one of the purchases.
- Social media-driven impulse purchases are costing Americans hundreds. Those who made impulse purchases based on products seen on social media in the past year spent an average of $754.
- Few admit to using social media to look successful. 57% of social media users believe that people post to look successful, but only 12% of users admit to doing it themselves.
- Social media can drive people to feel negative about their finances. 20% of users have felt negatively about their financial situation after seeing posts from others on social media.
Nearly half of Americans have made an impulse purchase after seeing a product on social media
If you’ve ever bought refrigerator storage after seeing someone fill theirs with snacks on TikTok, or if you’ve ever purchased expensive gaming accessories after seeing someone rave about them on Reddit, you’re not alone.
Nearly half (48 percent) of social media users say they have impulsively purchased a product they saw on social media, and 68 percent of those buyers say they later regretted at least one of their purchases.
Source: Bankrate survey, August 16-23, 2023
Note: Percentages may not total 100 percent due to rounding.
Within the past year specifically, 39 percent of social media users say they have impulsively purchased a product they saw on social media, and 57 percent of those people say they regret at least one of their purchases.
Spending impulsively isn’t necessarily negative, but if you realize you’ve been spending more than you would like, or if you’re neglecting saving in favor of discretionary spending, Bankrate Senior Industry Analyst Ted Rossman recommends taking a breath before your next impulse purchase.
Consider the 24-hour rule, which entails stepping away from that item in your cart for 24 hours before you buy it. You can still purchase it the next day, but that extra time lets you reconsider if you really want the item or not.
“For larger amounts, you might even want to hold off for a week or more,” Rossman says. “Make sure to involve your spouse in the discussion as well (if you have one). We found that secret spending is the most common example of financial infidelity.”
The urge to impulsively spend is affecting younger generations more than older generations: Gen Zers (ages 18-26) and millennials (ages 27-42) are most likely to purchase something impulsively after seeing it on social media:
|Generation of social media users||Percentage who say they have impulsively purchased a product they saw on social media in the past year||Percentage who now say they regret at least one of those impulsive purchases|
|Source: Bankrate survey, August 16-20, 2023|
|Gen Z (ages 18-26)||60%||58%|
|Millennials (ages 27-42)||61%||55%|
|Gen X (ages 43-58)||42%||56%|
|Baby boomers (ages 59-77)||34%||62%|
Though baby boomers (ages 59-77) were the least likely generation to purchase a product they saw on social media in the last year, they were the most likely (62 percent) to regret one of those purchases.
Americans spend $754 on average per year impulsively buying products they see on social media
Impulse purchases can add up quickly. Over the past 12 months, Americans impulsively purchasing items they saw on social media spent an average of $754. Around one-quarter (26 percent) of impulse buyers spent at least $500:
Source: Bankrate survey, August 16-23, 2023
Men and younger adults tend to spend far more on their impulse purchases due to social media. Male impulse buyers spent an average of $999 on their purchases over the last year, nearly twice as much as women, who spent an average of $518.
Millennial social media impulse buyers spent the most of any generation, around twice as much on average as Gen Xers or baby boomers. Also, Gen Z social media impulse buyers were the most likely to spend more than $500 on products seen on social media, more than twice as likely as baby boomers, who were least likely to spend that amount:
|Generation of social media users who made an impulse purchase*||Average amount spent on impulse purchases inspired by social media*||Percentage who impulsively spent $500 or more on products they saw on social media*|
|Source: Bankrate survey, August 16-20, 2023
*Over the past year
|Gen Z (ages 18-26)||$844||30%|
|Millennials (ages 27-42)||$1,016||33%|
|Gen X (ages 43-58)||$522||22%|
|Baby boomers (ages 59-77)||$418||13%|
1 in 5 users feel negatively about their finances because of social media
When many influencers show off expensive cars, luxury goods and international getaways, social media users say they feel bad about their own finances in comparison.
One in five (20 percent) users felt negatively about their own finances after seeing posts on social media. Additionally, 9 percent say social media has a negative effect on how they manage their money:
Source: Bankrate survey, August 16-23, 2023
Although social media users feel bad about their own finances compared to what they see online, most say they believe other users don’t show an accurate portrayal of everyday life.
More than one in two (57 percent) users believe people sometimes post on social media to appear more successful. Few will confess to doing that themselves, however — only 12 percent of social media users admit to posting in order to appear more successful. Additionally, 51 percent say social media promotes unrealistic lifestyles.
Younger generations admit to bending the truth on social media more than older generations: Gen Zers and millennials are roughly three times as likely as Gen Xers and more than 10 times as likely as baby boomers to admit to posting on social media to look more successful:
- Gen Z (ages 18-26): 21 percent
- Millennials (ages 27-42): 22 percent
- Gen X (ages 43-58): 7 percent
- Baby boomers (ages 59-77): 2 percent
In an even wider generational gap, Gen Zers and millennials are roughly four times as likely as Gen Xers and about sixteen times as likely as baby boomers to say social media has a negative effect on how they manage their money:
- Gen Z (ages 18-26): 17 percent
- Millennials (ages 27-42): 16 percent
- Gen X (ages 43-58): 4 percent
- Baby boomers (ages 59-77): 1 percent
3 tips to keep FOMO from affecting your budget
It can be hard to stick to a budget, but it’s especially hard when social media encourages you to buy the hottest new products. When fear of missing out, or FOMO, gets you down, remember these tips to stay on track with your financial goals:
1. Evaluate your discretionary spending.
How much wiggle room do you actually have to spend outside of bills? Re-examine your budget and identify how much you have in discretionary income, or the money you have to spend after you pay your monthly fixed bills. If you spend too much on streaming services and realize you would rather spend it on Saturday nights out, cancel those subscriptions and free up the funds.
Money tip: A good budgeting rule of thumb is the 50-30-20 rule. Ideally, 50 percent of your budget should go to fixed expenses, 20 percent to savings and 30 percent to discretionary spending.
2. Identify triggers for impulse spending
If you’ve ever spent too much at the grocery store while hungry, you know your mood can impact your spending. Identifying your emotional triggers can let you know if you’re buying something because you need it or can afford it — or if you’re engaging in emotional spending. Set down your phone when you identify that you’re shopping in response to a trigger and come back to the item later to see if you still want it.
3. Don’t try to cut discretionary spending completely
Avoiding impulse spending doesn’t mean you never book a trip inspired by Instagram. Instead, set that trip as a goal for the future and make sure that you have room in your budget for it. If you don’t, allocate a portion of your savings for future big discretionary purchases, like a vacation or luxury item you’ve been eyeing. With a little planning, you can live within your budget and treat yourself, too.
What is social media’s effect on your finances?
Nearly half (48 percent) of social media users say they have impulsively purchased a product they saw on social media and 68 percent of those buyers say they regret at least one of their purchases, according to a Bankrate poll.
Why is social media bad when you’re trying to save?
Social media can lead to unrealistic expectations on how to spend and save. More than one in two (57 percent) social media users believe people sometimes post on social media to appear more successful. Roughly one in two (51 percent) say social media promotes unrealistic lifestyles.
How can people use social media to learn more about personal finance?
Not all social media users promote unhelpful financial habits. Follow your favorite financial influencer to learn more about their personal finance strategy. Or, search for a financial advisor who can guide you one-on-one.
This article originally appeared here and was republished with permission.