Whatever your age, lifestyle, and ambitions, there’s a good chance that social media plays a role in your life.
According to figures published by DataReportal, there were 56.2 million social media users in the UK in January 2024, which equates to 82.8% of the population.
Indeed, platforms such as Facebook, Instagram, and LinkedIn have made it quick and easy to shop, connect with people, seek entertainment, and share information on the go.
However, social media may have its downside too.
Constant exposure to images of other people’s seemingly successful lives, products you dream of owning, and luxury holidays could lead to unhealthy comparisons, overspending and financial stress.
If this sounds familiar, read on to find out how social media might be affecting your financial wellbeing and discover three tips for using it more mindfully.
Social media could lead to unhealthy comparisons and overspending
Social media can be a powerful tool for building professional connections, reducing the taboo of talking about money, and seeking out the best deals for your next purchase.
However, it can also lead to unhealthy comparisons and potentially, overspending, because social media accounts often present a skewed view of reality.
People typically share the best moments of their lives, such as glamorous holidays, promotions, and engagement announcements. Meanwhile, the mundane and less positive aspects of life remain private.
As a result, you may be tempted to overspend to create the life you see others enjoying.
Indeed, research published by Forbes suggests that social media could accelerate “lifestyle inflation” – the tendency to spend more as your income increases.
Of course, this is a common response to a rise in salary, using your wealth to slowly improve aspects of your lifestyle. However, constant exposure to the luxurious lives of others could tempt you to increase your spending more rapidly than you otherwise would.
What’s more, if you’re chasing the lifestyle you see on social media, you may be less inclined to consider alternative ways to use any extra money you receive, such as boosting your savings or contributing to your pension.
Trusting “finfluencers” could result in poor financial decisions
Research published by the Actuarial Post suggests that UK adults are more than twice as likely to take advice from social media than a regulated financial planner.
This is concerning for several reasons.
“Finfluencers” are social media influencers who offer financial advice and information online. They are often unqualified and unregulated. Indeed, anybody can create a social media profile as a financial influencer.
This often means that financial advice is given without the necessary disclaimers and risk warnings you need to make an informed decision.
Indeed, a charismatic and prestigious finfluencer could persuade you to pursue investment trends that may not deliver the returns you expect. Fear of missing out – or “FOMO” – could drive you to make emotional decisions, rather than logical ones.
Taking financial advice from social media could also expose you to a greater risk of falling victim to a scam. A report by MoneyWeek has warned that social media investment scams have gone up by 23% year-on-year.
So, relying on finfluencers could potentially harm your financial wellbeing in several ways.
3 practical ways to use social media more mindfully and protect your financial wellbeing
1. Limit the amount of time you spend on social media
Just seeing an ad for a product or catching a few seconds of a finfluencer’s video could be enough to affect the financial decisions you make.
So, reducing the amount of time you spend on social media will limit your exposure to content that could negatively affect your financial wellbeing.
Consider setting a timer on your phone when you start scrolling through social media. Or, use your phone settings to block you from accessing these apps and websites after a certain amount of time.
2. Create a robust, long-term financial plan
Having a clear idea of what you want to achieve in the long term could help you avoid getting sidetracked by the latest product ad or “unmissable” investment opportunity that everyone’s talking about online.
If you have a long-term financial plan that aligns with your specific circumstances and goals, you may be less easily swayed by persuasive or inaccurate online content.
3. Consult a professional financial expert for guidance
Regulated financial professionals must have achieved certain qualifications and accreditations to practice. What’s more, they’re regulated by the Financial Conduct Authority and must comply with rules of professional and ethical practice.
So, by consulting a financial planner, rather than social media, you’ll have peace of mind that you’re taking advice from someone with expertise and accountability.
Get in touch
As an independent financial planning firm, Lloyd O’Sullivan offers unbiased and objective advice.
If you’d like financial advice from qualified and regulated professionals – rather than social media – we can help.
Please contact us by email at info@lloydosullivan.co.uk or call 020 8941 9779 to see how we can help you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
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