Is ‘financial FOMO’ sabotaging your savings?

If you’ve ever come down with a bad case of FOMO, you’re not alone. The problem: It could be harming your financial security.

From viral TikToks about overnight crypto fortunes to friends bragging about their 10-step luxury skin-care routines, financial FOMO is common. Surveys show that social comparison plays a growing role in everything from overspending to risky investing behavior.

But when fear or anxiety fuels your financial decisions, mistakes tend to follow. Understanding how to spot (and stop) financial FOMO could be the key to getting your savings on track.

“Fear of missing out” — also known as FOMO — is the anxious feeling that other people are having rewarding or exciting experiences than you are. FOMO might cause you to go out, take certain trips, or buy specific items to keep up with your peers, even if you wouldn’t want to otherwise.

Financial FOMO, specifically, is the fear of missing out on money-related opportunities. For example, you jump into trendy investments, overspend during sales, or rush major financial decisions because of the perception that others are doing it and benefiting.

So what causes FOMO? Experts say it can stem from a variety of factors, but social media often plays a significant role. Half of the respondents in a recent Empower survey said seeing what others are buying on social media motivates them to spend money due to a fear of missing out.

“As a society, we are very uncomfortable talking about finances, and it can cause people to overspend to keep up with their friends or appearances on social media, instead of being honest about their financial situations and limits,” said Julie Beckham, financial education officer at Rockland Trust Bank.

Plus, it’s easier to give in to temptation when your social media feeds are flooded with advertisements, gadgets, travel content, concerts, exclusive dining experiences, and more.

However, the short-term satisfaction that often comes with impulse buying can lead to long-term financial pain, according to Beckham.

Read more: Behavioral Finance 101: 7 ways your brain can sabotage your finances

When your spending decisions are driven by a fear of missing out, rather than your true needs and values, it can derail your long-term goals and sense of financial security.

Some of the ways financial FOMO can negatively impact you include:

Impulse spending on so-called deals: FOMO makes limited-time sales and social media must-haves feel urgent. So you end up buying things you didn’t plan for, pulling money away from your established savings goals.

Chasing trends instead of your budget: When you see others upgrading their lifestyle, it’s easy to rationalize spending you can’t actually afford. This leads to budget creep, where your monthly spending starts to increase while your savings shrink.

Taking on unnecessary debt: FOMO can lead to using credit cards for purchases you can’t afford just to participate. And if you carry a balance month to month, those double-digit interest rates cause your debt to grow faster than your savings.

Risky investments that backfire: Seeing others “making big gains” can push you into volatile or speculative investments. But meme stocks and fly-by-night crypto investments only work out for a handful of people — and by the time everyone is talking about it, it’s usually too late to capitalize on the hype. If the market turns, you lose money that could’ve gone toward tried-and-true savings and investment options.

Not sticking to long-term goals: FOMO shifts your focus to what others are doing instead of what’s right for you. These distractions can cause you to lose focus on your long-term priorities and plans.

That said, a bit of FOMO isn’t always a bad thing. The same Empower survey found that over 15% of those who experienced financial FOMO said it inspired them to invest, while others said it made them open a new savings account (14%) or improve their debt repayment strategy (13%).

The key is to channel your financial FOMO into positive money habits. For example, watching your peers achieve major milestones (such as buying a home or funding a college education) can prompt you to take your own planning seriously, rather than putting it off. Your friend’s once-in-a-lifetime trip to the Maldives could inspire you to cut back on discretionary spending and start taking your travel savings fund seriously.

Read more: How I pair travel credit cards with a high-yield savings account to maximize family vacations

If you struggle with financial FOMO, the first step is reshaping the narrative in your mind. If you condition yourself to feel disappointed each time you see something on social media that you can’t afford, you may overlook all of the things you can afford to do and the financial goals you will achieve if you stick to your budget.

Beckham said her biggest piece of advice is to create an intentional spending plan. “Starting early and saving and budgeting consistently can really pay off and put you in a position to better assess what added expenses you can say yes to,” Beckham explained. “It feels a lot better to save for a year to go away than to go away and spend the next year paying for that vacation, plus interest.”

Establishing a values-based budget can help you align spending decisions with the things and experiences that actually matter to you. When you’re tempted to make a purchase, ask yourself how that purchase would fit within your value system. If it doesn’t, you’ll feel better about skipping it.

If you’re easily tempted by what you see on your social feeds, set yourself up for success by being intentional about the kind of content you consume.

Consider adjusting your account settings to limit the number and type of advertisements you see on your feeds, and set daily screen time limits to reduce the time you spend scrolling. You may find it easier to avoid financial FOMO if you can’t see what you’re missing.

Declining an invitation isn’t a crime. If you’re asked to join an expensive dinner or weekend away with friends and it doesn’t fit into your budget, learn to be OK with saying “no” for your own financial well-being. Having open and honest conversations with your loved ones can help them better understand why you might be skipping a particular outing and may even prompt them to come up with more affordable alternatives so that you don’t have to miss out.

Read more: How the ‘loud budgeting’ trend could help you save more money