Social media is everywhere and covers everything.People use social media for connecting, shopping, content, entertainment and sharing information.While some scrolling is harmless, the dangers of social media is becoming more and more evident.This is especially true when it comes to our financial health.
Lifestyle inflation, the tendency to increase spending as your income increases, is nothing new.However, James Curry, Director of Wealth Management at Greenleaf Trust, explains that social media has made it easier to fall prey to the allure of lifestyle inflation.
"Social media constantly exposes us to the glamorous lives of others.Carefully curated snapshots of lavish lifestyles fill our feeds as we scroll through the social media platforms, flashing images of luxurious vacations, designer wardrobes, and extravagant dining experiences."
This leads us to an unrealistic, inflated and inaccurate perception of wealth.Curry believes this constant exposure to excess can subconsciously influence us to adjust our spending habits to match the experiences we are seeing online.
The result, Curry says, is often high-interest credit cards and loans used to sustain a lifestyle that is unsustainable in the long run, jeopardizing their financial stability and future goals.
To avoid these traps and the financial pressures brought on by social media, Curry recommends establishing clear financial goals and balancing your short-term enjoyment without harming your long-term goals.
In addition to the dangers of lifestyle inflation, social media also poses a threat with the massive amount of financial content and advice found online.
While there are plenty of 'finfluencers' giving great advice, educating users and making a positive impact, you should always consider the source and motivation before making any financial decisions.Things to watch out for are:
Anyone selling or promoting a financial product.This isn't to say that the product is a bad idea, but do your research before buying anything.Look up the posters credentials and check if they receive a commission.
'Hacks' for getting out of debt or 'Get rich quick' schemes.Unfortunately there are very few short cuts in finance.And, if someone had a way that actually made them 'rich quick' — why would they monetize it?
'Guaranteed' returns or results.With a few exceptions, there are no investment guarantees.The nature of investing is risk.The bigger the risk, the bigger the potential reward (and loss).
Financial Courses.Again, there are some really valuable ones out there.But before you pay for 'expert' advice, make sure they are an expert.