Financial planners have always warned that the “lifestyle creep” that comes with the desire to keep up with friends and neighbors can hurt consumers’ ability to meet their long-term financial goals.
As we’ve have expanded our social circles, however, thanks to social media sites like Facebook and Instagram, we’re now trying to keep up with even more people. Nearly 40 percent of American adults with social media accounts say that seeing other people’s purchases and vacations on social media have prompted them to look into similar purchases or vacations, and more than 11 percent spent money after seeing someone else’s post, according to a new poll by the American Institute of Certified Public Accountants.
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The more people that we’re comparing ourselves to, the harder it becomes to keep up. “That can lead to a feeling of financial inadequacy and a desire to spend money you might not have,” Gregory Anton, chair of the AICPA’s National CPA Financial Literacy Commission said in a statement. “Some people are purposely curating a more glamorous image on social media and, unfortunately, it can have a negative impact on their friends and followers who feel compelled to keep up with them.”
More than 20 percent of Americans adults with social media accounts say they have chosen an activity or purchases based on how friends and family will view their post about it. Perhaps unsurprisingly, younger people are more likely to factor social media reaction into their purchasing decisions, with millennials more than twice as likely to say that the reaction of friends and family on social media affected their buying habits.