What Is FOMO, and How Can You Overcome It?
Have you ever spent money on something just because you felt like you'd miss out on an experience otherwise? Learn how to recognize and avoid that trap before you go broke!
When Zardan R. notices friends posting photos on social media of themselves on the beach or attending music festivals abroad, he feels left behind and that he should be seeing more of the world.
“I’d like to go to concerts or travel, but I can’t afford it, so when I see friends on Instagram dancing at Rock the Bells or swimming in the ocean, it makes me want to spend money I don’t have,” says the 33-year-old videographer who lives in New York City.
What Is FOMO, and What Causes It?
Zardan is among the 55 percent of millennials who report experiencing fear of missing out (or FOMO), according to a study released by Allianz Life Insurance Company of North America. FOMO is a syndrome that is typically provoked by news or social media posts and is not to be confused with affluenza, a term coined by mental health professionals to describe the feelings of guilt, lack of motivation, and social isolation experienced by people who are financially privileged.
Some 57 percent of millennials say they spend money they hadn’t planned to spend because of what they see on their social media feeds.
The Allianz study found that 88 percent of millennials believe that social media creates more of a tendency to compare one’s wealth and lifestyle with others; and 71 percent of Gen Xers and 54 percent of boomers feel the same way. About 61 percent of millennials believe that social media causes them to feel inadequate about their life and what they have, and half claim they spend more money going out than they do on rent or mortgage.
“With social media, millennials are seeing what their friends are doing in the moment, which tends to make people question what they’re doing right now or what they should be doing,” says Paul Kelash, vice president of consumer insights for Allianz Life. “That can lead to a catch-up mentality and impulse spending, throwing millennials off their financial course.”
The Negative Effects of FOMO
“Putting on a show for friends on social media with resources they don’t have is devastating for those who use credit cards to achieve it,” says Andrea Clark, a financial adviser in Wichita, Kansas. “What debtors who have maxed out their credit cards to keep up with the Joneses don’t know is that somebody’s fancy car may be a rental or belong to a relative or that their friends may have wealthy parents who are paying for their exotic vacations.”
Renee B., for example, spent $4,000 that she didn’t have to pay a photographer because all her friends had posted their professionally styled family photos on Facebook. Now she’s struggling to pay off the debt she incurred to post wedding, gender-reveal, and newborn baby photos on social media.
“I told Renee that she is cheating her future self and her bank account every time she keeps up appearances she can’t afford,” Clark says.
Further Reading: Learn about debt relief.
How to Overcome FOMO
To rid Renee of FOMO once and for all, Clark includes role-playing exercises during client consultations that are focused on how to gracefully say no to overspending without feeling bad. “It’s the equivalent of talking to children about how to say no to drugs when you are among your peers,” Clark says.
Matt Kircher of Cleveland bought a boat when he was just 25 years old, traveled to Packers football games in various cities across America, and purchased a purebred dog that required shipping from Scotland, all because he fears missing out on life. “I’m an experience junky,” Kircher admits. The 27-year-old is also a financial adviser who has since curbed his FOMO spending and is helping others do the same.
“I teach my clients that FOMO spending is not going to help them reach long-term financial goals like a comfortable retirement or buying a home even if they can afford FOMO spending now,” Kircher says. “They may have $3,000 in disposable income in the bank to spend on a trip, but they may be better using the money to pay off debt or to save for emergency expenses.”
There are a few steps that you can take to overcome FOMO:
- Recognize the problem.
- Limit where you use social media.
- Cut back on how often you use it.
Further Reading: “How I Realized Celebrity Lifestyle Envy Is Like a House of Cards”
Step 1 — Recognize the Problem
The first step to recovering from the emotional aspects of FOMO is to recognize the problem, according to Joel Barcalow, a psychiatric counselor for Ohio State University Wexner Medical Center. “Be present in the moment without judgment and appreciate what you already have,” Barcalow says. “Find joy in your own journey and stop comparing your life with others’.”
Step 2 — Limit Where You Use Social Media
The second step is to limit where you use social media. For example, decide that the dinner table is a device-free zone. “Designate device-free areas in your home and life. Limit distractions by turning off all notifications except the most critical ones,” Barcalow says. “Be present now rather than wishing you were somewhere else or doing something else.”
Step 3 — Cut Back on How Often You Use Social Media
The third and final step is to check social media updates only once a day, because social media photo and video feeds are often just a mere highlight reel of a person’s life, accentuating its best and most exciting aspects. “What you often fail to see are the struggles and day-to-day activities that all individuals encounter,” Barcalow says. “Most of us aren’t partying or vacationing all the time, although it may look that way on an individual’s Facebook page.”
Further Reading: “Should I Stop Using Social Media? 5 Ways Facebook May Cost You”
Final Thoughts on Overcoming FOMO
For millennials, social media and the temptation to overspend can have long-term negative consequences that effect their finances, especially when affording a designer pet, the latest fashions, or a fancy new car are purchased at the expense of retirement savings. “The opportunity costs are huge,” Kircher says. “Overspending can have an impact on your credit score, car insurance rates, and ability to buy a home, as well.”
Strategies and tools can help millennials avoid getting caught up in the financial aspects of FOMO, according to Allianz Life’s Kelash, and it starts with budgeting. “If millennials develop a budget and have a strong understanding of their monthly expenses, they can determine how much money to set aside for entertainment and even some impulse spending on occasion,” he says.
When counseling millennial clients grappling with FOMO, Clark adds a positive twist. “Own your financial goals,” she says. “Be happy and excited about the plans you’ve established, even if it’s digging out of debt, because that contentment will be a supportive magnet.”
Further Reading: Get tips on how to set achievable financial goals.
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