Is Social Media the Reason Millennials and Gen Z Feel So Poor? 5 Key Signs It Is
Written by
Dawn Allcot
Edited by
Nicholas Morine
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The younger generations feel they are behind their peers financially, according to a recent survey from Qualtrics on behalf of Intuit Credit Karma. The survey discovered that 48% of Gen Z respondents and 59% of millennials polled feel they are behind financially. Yet, overall, 59% of respondents said they feel financially stable, Credit Karma reported.
These findings indicate a new financial trend: money dysmorphia. Money dysmorphia occurs “when people feel insecure about their financial standing, no matter the reality of their situation,” per Credit Karma.
“It’s a disconnect surrounding your finances — what your finances really are versus how you act,” Elana Feinsmith — CFP and certified financial therapist at oakfinancialcoaching.com — previously told GOBankingRates.com.
For instance, the Credit Karma survey found that 82% of respondents who reported money dysmorphia said they feel they are behind on their finances. More than 40% of both Gen Zers and millennials said they experience money dysmorphia.
Experts largely agreed that money dysmorphia is fueled by social media usage. Another survey from Edelman Financial Engines found that roughly 25% of consumers feel less satisfied with their finances because of social media.
“What we found was a really strong connection between feeling badly about your money situation and how much time you spend on social media,” Isabel Barrow, director of financial planning at Edelman Financial Engines, told CNBC.
Experts also revealed some cues that your financial choices may be driven by your social media scrolling habits.
You Overspend on Luxury Goods
Spending too much time on social media may cause you to overspend on trendy clothes or a luxury car. It may not be the best product for your needs or budget, but you want to show it off.
“There’s this perception that you have to portray yourself as successful and that means having an expensive watch or nice car and that is so untrue,” Carolyn McClanahan — a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida — told CNBC.
You Make Purchases Directly Through Social Media Apps
You might have a problem if you frequently make impulse purchases online based on ads or sponsored posts in your social media feeds. Experts recommended removing your account information from shopping apps. That extra step of re-entering your account information to make a purchase can give you time to pause and reconsider.
You Prioritize Spending Over Saving for Important Goals
A separate Credit Karma survey, as detailed by InCharge Debt Solutions, revealed that 40% of zoomers are willing to spend more on experiences than necessities. Meanwhile, 28% said they’re unable to save money. If social media-related spending is keeping you from achieving financial goals, such as buying a house or building an emergency fund, it may be time to reevaluate your budget.
You Use Credit or Buy Now, Pay Later Programs to Fund Non-Necessities
It’s bad enough putting your savings goals on the back burner to fund lavish purchases. But many social media users go into debt to buy what they see online.
Social media influencers often encourage the use of Buy Now, Pay Later (BNPL) programs. Unfortunately, a report from DebtHammer, as reported by InCharge, found that 45% of people use the service to make purchases that don’t fit into their budgets. Further, 55% spend more when they use BNPL than they otherwise would have.
You Experience FOMO When You See Your Friends Living a Lavish Lifestyle on Social Media
“Money dysmorphia is kind of like today’s version of keeping up with the Joneses,” Courtney Alev, consumer financial advocate at Credit Karma, noted in the survey report.
If scrolling social media triggers a “fear of missing out,” or FOMO, it might be time to close that window for a while and think about what’s really important to you.
Of course, you should allow yourself to have fun — but make sure your spending is aligned with your values and not what you see on social media.
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