Don't Let FOMO Stop You from Achieving Financial Goals
FOMO (or fear of missing out) may cause you to spend money on things when you may not have the funds to do so. Sometimes friends will influence you into purchasing things without really thinking about how much you truly want or need it.
And rather than being the only person in your peer group without the latest smartphone, you purchase a new device. Or you decide to splurge on a vacation with your friends because you don't want to be the only one left behind. While these experiences may be enjoyable, they shouldn't stop you from achieving financial goals when it comes to long-term saving.
Here's how to keep your finances on track when dealing with FOMO.
Prioritize Your Wishlist
Of course, you don't want to miss out on everything your friends are doing. The objective is to pick and choose what makes the most sense for you. Determine which experiences you'll regret missing out on the most. It can be helpful to make a checklist of your goals and rate which ones are most important to you.
In other words, if you love to travel, add money to your budget for vacations or new luggage while cutting back in other areas. Ideally, you won't be lured into spending money on expensive items that won't give you as much satisfaction, like concerts or sporting events.
Save for Large Items
If you want to purchase expensive electronics or take a big trip, understand that you may need to spend time saving. Don't be tempted to pay a nonrefundable vacation deposit if you're not sure where the remainder of the balance will come from. Weigh your options and be prepared to give something up, like exchanging shorter weekend getaways for one larger vacation with friends. Open a savings account designated for a special purpose and put a specified amount in there each week to help you reach your goal.
Do it Because You Love it, Not Because of FOMO
Buyer's remorse is real; no one enjoys the regret that comes with spending money on things that only bring short-term satisfaction. A study by Credit Karma found that millennials often overspend on experiences, like nights out with friends. If you find yourself accepting weekly invitations to new brunch spots that are out of your budget range, you may need to find ways to make these social events more affordable.
Set a limit before heading out the door and stick to it by only bringing cash. Suggest restaurants that are more affordable, and let your friends know you're trying to stick to a budget. If you choose to spend money on something, do it because you will derive satisfaction from it, not because you're afraid of missing out or feel pressured into it.
Set up a Budget that Includes Discretionary Spending
On the flip side, once you have a handle on your budget, you don't need to turn down every invitation or fun purchase. When planning your budget, include a line for discretionary spending. After meeting your savings goals and paying necessary household expenses, determine what's left for you to spend on nights out, new gadgets, or vacations. Find ways to stretch your dollars by taking advantage of discounts and sales. Wait for trade-in specials to upgrade your phone.
Fear of missing out can make you temporarily unhappy, but the stress that comes with overspending can have a large effect as well. Striking the right balance with saving and spending means learning to live within your means and prioritizing your spending on the things you enjoy most.