This week's post is a guest post I did for the hilarious and smart Andrew over at Funny Man Finance. Some of you may know him as the author of the Financial Jokes for Financial Folks, a collection of witty, comical, knock-knock type jokes that just what the austere industry of finance needs. Andrew really fills a void with his blog, by bringing some levity and fun into the world of personal finance.

This post is all about social media and how it impacts your relationship with money. More often than not, our brains absorb the pictures and posts of our friends and propel us to make similar decisions, whether it be a vacation to Hawaii or buying a Tesla. If it makes them happy, it will make you happy too right? The subconscious mind is a complex and intriguing place, yet data have pointed to an indisputable influence that social media has not only on our mental health but our financial health.

This article was originally published on Funny Man Finance on 8/22/21 and has been reposted with permission.

Ok, let’s get one thing straight. It’s unlikely that you’re going to feel emboldened to delete all your social media apps on your phone after reading this article. Heck, you could probably be bribed with $10,000 to swear off it for a year, only to relapse after 2 weeks. It’s hard, I know. I have some friends who I look up to, and they don’t have any social media. I mean not even YouTube or LinkedIn apps on their phones. They happen to be very convivial, fun, and well-rounded people as well. How do they do it? For me, I’ve never had Twitter or Instagram or anything other than Facebook and LinkedIn.

MySpace was all the rage in high school, and then freshman year of college you were the black sheep if you didn’t have Facebook. What’s even crazier is 2007 was when the iPhone came out, so before that, we literally would check Facebook by logging into it at the computer lab or during class, “poking” and commenting in real-time during lectures. I am so glad I graduated college without a smartphone because I got to live in the moment and not have some questionable decisions I made haunt me forever.

Now, social media is great for a lot of reasons, and it’s also made a lot of ordinary people very rich. I love being able to see photos of a friend’s wedding I couldn’t attend on the other side of the country, or keeping tabs on all the cool events happening in our area. LinkedIn has also been critical in helping me and a lot of other people be more intentional without job search, and it’s almost a must-have if you are a professional trying to find work. It’s allowed for more connections and introductions than I can list here and has improved the lives of many while keeping friends and families that are far apart from one step closer together.

However, there are many drawbacks, and in my opinion, more so if you are trying to reach FI.

Social Comparison

We’ve all been there, scrolling on pictures our friends have posted and seething with envy on if they “deserve” the life they live. If you’re active on social media today, you’ve surely heard mental health professionals, investigative journalists, and other influential leaders talk about how the perfect life people try to paint on their social media profile often distorts reality. People are quick to post professional photos of their $8,000 baby shower or a moving tribute to their spouse, who may not even be on social media. However, you’d probably be hard-pressed to find someone who shares candid, genuine, and vulnerable posts or pictures (unless they are seeking attention for the wrong reasons).

How does this impact your finances? Well, social comparison can normalize spending on things like professional photography or more frequent and opulent vacations. While you’re trying to pave your path and focus on conscious spending, seeing your friends spend on certain things can make you feel like it’s appropriate to spend on those things yourself, without even thinking if you want it. Here are some ways you can mitigate social comparison.

A YOLO Mentality

Similar to the previous point, scrolling through social media can make you feel like you’re missing out on life. Let’s say you’re driving for DoorDash for your side hustle to help you toward FI, and while waiting on the train you scroll through your feed to find a group of friends having dinner at an upscale restaurant that you love. Or maybe your roommate from college and her family are vacationing at a beautiful lakehouse. You might start grimacing and thinking why you’re being so frugal, and that you’re missing out on the fun of life.

So, you give up your side hustle so that you can join your friends for happy hour during the week, and attend every party or social engagement on the weekend. That will most certainly derail, or at least slow down your path to FI. What else should you do? Instead of depriving yourself, savor what you love, keep a limit on social media, and remind yourself every time you feel like you are missing out that you’ll have more freedom than them in no time. (Or, close the social media app and check the Mint app for a little reassurance).

Distorted Opportunity Costs

If you haven’t read The Millionaire Next Door you should go borrow it from the library right now. It’s a wonderfully written narrative about how the relatively wealthy really live. They usually don’t flaunt their wealth, or “fake it till they make it” like some people on social media. You see a friend that bought a new house, and you think to yourself you should buy one as well to “house hack”.

But what if buying a house isn’t on your goal list, at least for now? What if you are making better use of your capital in the market, paying down debt, or starting up a business? Just because you see others taking advantage of certain things, doesn’t mean you should. You’ll always think your money could be better spent somewhere else if you see your friends and family doing so. You’re not going to miss out on a “hot opportunity” as long as you follow your plan, and diligently vet out other options. You also want to make sure you have balance. Enjoy your life and meet up with your friends, as long as your macro plan is on track.

Listening to “Professional Noise”

So now that we’ve covered friends and influencers (which is synonymous in some instances) let’s move on to the other noise on social media. If you’re on social media, you probably also follow certain companies, groups, event/production pages, etc. When you’re in a personal finance-related group, for example, you might see people very confidently doling out advice on what you should and shouldn’t do.

Now, people sharing their own experiences is completely fine, but sometimes people will give unsolicited advice without even knowing much about the person they are lecturing to. You might think this person is reputable based on the number of likes their response gets, or how many followers they have. This also relates to video apps like YouTube and TikTok. I’m surprised at how so many people, some with no credentials or experience, create content around things like how to time the market, and when to get into cryptocurrency.

It’s fine to read into the experience of others, but before you make decisions with your hard-earned money, be sure to seek professional advice, or at least an article on a website like NerdWallet that is supported/contributed to by licensed professionals.

Unconscious Product Influence

It used to be you just had to watch out for your friends who got into MLMs, or sales-type gigs where they annoyingly share a sale of some overpriced sleep supplement on their page and tag you in it. Now, with programs like Amazon Affiliates and others, you can never really be sure if they are swearing by it because they love it, or because it’s a hot item and they would earn a good amount on it. It doesn’t even have to be an upfront endorsement.

Have you seen those music videos where they have the star using the latest model phone, or driving an all-new model car? They’ll pop in a few shots of the company’s logo, and this is often an arrangement between the product company and the producer of the video. On social media, it could be the handbag your friend is holding in a picture or the laptop your friend shares a picture of while they post about how they are so tired of working from home.

Just seeing your friends and family, or even influencers using certain products can plant a seed in your mind that you want that too, even if you don’t. You’ll think to yourself I can afford that, and I deserve it. Until, hopefully, you snap out of it, close the app, Go read Financial Fives, and proclaim “What am I thinking, I don’t even like skiing!”

Gary Grewal is a Certified Financial Planner, entrepreneur, and car aficionado. He writes at financialfives.com and is the author of Financial Fives: The Top 325 Ways to Save, Earn, and Thrive to Retire Before 65.