Financial FOMO: The Millennial Struggle to Keep Up
In January of last year, two documentaries were released on both Netflix and Hulu that took social media by storm: the story of the Fyre Festival. In a volatile combination of millennial marketing, the fear of missing out (otherwise known as FOMO), false advertising, high credit card purchases, and the prestige of a highly-sought after event – the perfect storm was born. What was left in its wake was enraged consumers and conned vendors.
However, this article isn’t about the Fyre Festival or scam artists. But it is about the same issues that current young professionals face today, that the Fyre Festival attendees bought into, something that other generations haven’t experienced to this capacity.
Keeping Up with the Joneses is Alive and Well
Comparing one’s worth and material possessions to their neighbor is not a new concept, nor does it discriminate against generation. But just like with most things, it affects our culture in unique and never-before-seen ways. One reason the Fyre Festival was able to reach an incredible amount of people was because, yes, you guessed it- social media. Similarly, today consumers are able to learn about events that they never would have previously – events that they feel they are missing out on. We can even see which “friends” of ours will be attending these events. It’s no wonder many may feel excluded from experiences with their friends – what if they miss out on a fantastic time? They want to feel included and connected. Maybe most millennials aren’t buying homes or having kids as fast to keep up with friends and family members. Instead money is going to entertainment and travel, and in many cases, are breaking the bank.
It is not shocking at all to find out the average millennial owes $4712 to credit card borrowers, according to Experian. CompareCards, a division of Lending Tree, found through surveys that 2 out of 3 millennials have credit card debt, far exceeding the number of student loan borrowers. And unfortunately, many times that debt is coming straight from unnecessary expenses and not emergencies. In fact, this same survey found the top three categories for most debt were restaurants, travel, transportation, and grocery/big box stores. “The harsh reality is that credit cards make it easier to justify overspending," Jason Huynh, head of credit and analytics at Tally, told BuzzFeed News. "It’s very easy to justify in the moment that the convenience of buying dinner at a restaurant outweighs making dinner at home. But what seems necessary in the moment can quickly become overwhelming credit card debt.”
While there is no question about a cultural shift towards credit card spending for non-essential items, this is also a financial hardship other generations didn’t face, claims Business Insider. But worry not-- there is no reason to lose hope if you are struggling to pay off your debt but don’t want to cut off entertainment with your friends completely. The following seven habits are tried and true and can help you rise to a great place financially while still prioritizing your social life.
Seven Financial Health Habits
1. Budget and Plan
You probably were waiting to hear the dreaded “B” word here, but it truly makes a difference in avoiding the red. You should always have a restaurant budget and entertainment budget, and maybe even a miscellaneous budget. This will allow you to always have money dedicated to special events and social opportunities throughout the month. The trick is, once it’s gone, it’s gone. Which leads us to our second point--
2. You Can’t Choose it All
You may need to exercise saying “no”. With most things in life, we can’t have it all. Choose the thing or things you want most each month and use your previously budgeted entertainment money to cover it. For example, if you are going to a music festival in New Orleans, it would be financially steep to purchase tickets, new outfits, a hotel room, and unlimited refreshments. Instead, buy the tickets, wear a few outfits your already own, book an Air B N B, and bring cash for food and drink. It’s all about priorities and choosing to splurge on the most important items and being frugal on the rest.
3. Cut the Alcohol Bill
By far, alcohol can quickly sneak itself in and ruin all entertainment and restaurant budgets. According to Money Crashers, alcohol can be marked up to 600%. It is far better, and cheaper, to have most of your drinking at home, and then only order one drink while you’re out and about. If you want to take your savings a step further, Costco is known for their great prices and quality of liquor. Stock up your pantry here and you’ll see your dollar go further.
4. Cash, Cash, Cash
In a world of credit cards, it is too easy to overspend and not even realize how much money you are actually charging. It is a proven fact that by charging a card, it doesn’t hit you the same way that it does in cash. This could perhaps be linked to the idea that this is a credit line that you pay off later, while once your cash is gone, there is no replenishing your wallet. If you’re deciding to spend a night on the town or attend a special event, only bring a set amount of cash to insure you do not spend more than you plan.
5. Take a Cash Fast
This is by far the hardest of all—and may be something you only do a couple of times a year. But for the times that you are able to, it can be a game changer for your finances during the month. Make a pact of not spending one cent from the moment you wake up on Friday morning to the moment you call it quits on Sunday night. You may need to make some planning for groceries and activities prior, but it can be a great way to inspire some night ins with friends or maybe quality time in front of Netflix with your loved ones.
6. Payroll Deduction or Automatic Transfers
One of our favorite ways to guarantee success in saving up for a dream vacation or spring break trip is making it happen automatically. Set yourself up for a payroll deduction into your savings, or if your company doesn’t offer that option, set up a monthly transfer from your checking to your savings right after your paycheck hits your account. You’ll become used to seeing a lower money and thus, not spending that extra cash. It a great way to trick you brain into saving.
7. Plan Less Expensive or Free Escapades
Although this is a given, it does not hurt to be a little more creative to hang out with friends in a way that benefits both of your bank accounts. Plan a picnic or bike ride at your most scenic park, take a walk downtown, or host a wine and cheese night – where you provide the cheese and each friend brings a bottle of wine. Avoid retail or window shopping; this usually ends with you buying something you were never planning on buying to begin with.
Member Testimony
Meritus Credit Union member Helen K was no stranger to the struggle of paying bills while trying to maintain an active social life. “It’s a hard landscape to navigate as a single thirty-something-year-old,” explained Helen. “There is a pressure to put yourself out there in order to meet the right person or you may want to hang out with your friends so you’re not all alone on a Saturday night. If they’re going out, then you’re going out and all the money required to achieve this.” It wasn’t long before she had to rely on credit cards to keep up with the social demands of her friends. Coupled with the fact that she was on a teacher salary, there was no way to mathematically not end up in credit card debt. Luckily, she was able to come to the credit union and take out a loan with a much lower interest rate than her incredibly high credit card interest rates. She is now almost finished paying off that loan and can breathe more easily. “It is definitely not an easy road to take. You have to learn how to say no, and pick and choose which events or social gatherings or most important to you. But in the end it pays off, because there is nothing worth the stress of credit card debt.”
While many of these principals may seem elementary or obvious, there is an apparent disconnect with the current culture and making financially savvy decisions. The new normal is to overspend beyond your means and you are now the minority if you aim to avoid debt. However, the wish and desire is to be out of debt to avoid these high interest payments (while still enjoying entertainment) and to keep your paycheck where it belongs—in your wallet.
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Sources:
Millennials' Credit Card Debt Is Rising. Here’s What People Are Charging.