Is 'fear of missing out' driving millennials into debt?

Your friends are backpacking through Asia, tweeting photos of sunsets from exotic locales along the way. Others are posting Facebook updates about buying a new house, going to superstar concerts or even going back to school to get another degree. Your Instagram feed is flooded with motivational quotes about living life to the fullest.

It can be tempting to try to keep up and prove your life is just as exciting and full, even if it means turning to credit cards because you can't necessarily afford it. It doesn't matter that you know each person had to save for months to afford those trips and other purchases. Seeing so many at a time on your newsfeed can make you feel like everyone is in on some secret to an exciting life -- except you.

Millennials don't want to be left out
The fear of missing out (FOMO) is real. A March 2015 report from Citizen Relations says social media may be pressuring Canadian millennials into living large and overspending. Brian Pritchard, a credit counsellor and senior vice president at BDO Canada, says the messaging is aimed at young Canadians. fomo

In the Citizen Relations report, 56 per cent of millennials (18- to 30-year-olds) questioned said they felt pressure to live big and keep
up, and 68 per cent said they would make a purchase as a result of FOMO. A quarter of those asked said they fear losing social recognition or "being in the know" if they skip out on key opportunities.

The higher your income, the more likely you are to succumb to FOMO. The report says those who make between $75,000 and $150,000 annually experience more FOMO than those who make less. What's more, this group makes more purchases when they feel left out, and are more likely to purposely try to create FOMO in others.

New generation, new challenges
Judith Cane, an Ottawa-based expert with Money Coaches Canada, says millennials are under pressure unlike any other generation to maintain their social status.

"They're no longer keeping up with the Joneses, they're keeping up with the Kardashians," she says. "It's this whole idea that you have to drive an expensive car, you have to have the best smartphone and you have to dress a certain way and spend $15 on a drink."

Cane specializes in working with millennials. Her clients are often fresh out of university, buried in debt, yet are compelled to move into an apartment on their own and partake in similar experiences as their peers even if it's out of reach for their budget.

"They start to keep up this fear that if they don't do this right away, they'll miss out," she says. "It's a generation of instant gratification."

Cane doesn't blame millennials and doesn't think they're any more vulnerable than other generations. It's just they're a technology-savvy group and that's where advertising dollars have shifted.

"It wasn't in our faces all the time like it is now," she says. "It's creating this urgency to do something and this didn't exist [before]."

How to reel in the spending
Cane says to think outside of the box when you want to have fun without breaking the bank. For instance, instead of going out for dinner and drinks, try hosting a dinner-and-wine potluck. Or, instead of splurging at expensive department stores, try your hand at vintage shopping.

Pritchard also emphasizes the need to forge a financial path early on. If his clients are entering their last year of university, he says, they need to be aware of the reality of student debt with interest, income tax and making rent while potentially unemployed on the other end of their degree.

"It's hard to tell a 25-year-old about their retirement when it's so far off into the distance but there needs to be a discussion about the future because it does come quickly," he says.

Pritchard also feels easy access to credit cards and lines of credit has only exacerbated the problem, because it's easier to ignore how much you're spending if you're swiping rather than handing over cash. He suggests leaving credit cards at home and spending with cash so you can feel the money leaving. This could help you spend less, or at least think about each purchase more thoroughly.

Finally, he says, remember a new purchase comes with a fleeting thrill.

"When you get a new car today, it's exciting and smells good and you show it to your friends," Pritchard says. "[The thrill wears off after a few months, but] five to six years later, you're still paying for it."

See related: Cybercrime is nothing to like or share, How age, income, education affect preferred payment types
Published July 8, 2015

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