Is social media keeping you in debt?

We’ve all been there. What starts as a bit of aimless social media scrolling ends with you shopping around for the latest fashion trends or last-minute travel deals. But how does it happen?

From the moment we unlock our smartphones, we are bombarded with endless products and experiences that – thanks to personalisation algorithms – have been tailored to our hobbies, interests, and even recent internet searches.

This can make it quicker and easier to find exactly what you are looking for but with 40% of people admitting to purchasing something just because it was advertised on Twitter, YouTube, or Instagram, it can also lead to overspending which is a slippery slope to debt.

On the surface, social media is nothing more than a way to connect with family and friends, but does it have a darker side? In this article, we’ll explore the relationship between social media and debt as well as what signs to look out for if you think social media might be keeping you in debt.

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Influencer culture

In the past few years, social media has been taken over by influencers or, put simply, micro-celebrities that make a living promoting products within a certain niche.

This phenomenon – which was largely unheard of just a couple of years ago – has grown to become a globally recognised industry worth £12.57 billion.

But with some influencers failing to disclose that items have been gifted to them free of charge and click-through links earning them a comfortable commission, it only takes a few minutes for a quick social media scroll to turn into a non-stop shopping spree at your expense.

This has led to a surge in Buy Now, Pay Later (BNPL) debt with some shoppers willing to do (and spend) whatever it takes to keep up with the latest trends even if they don’t have the funds to cover the cost.

Social media shopping

In 2020, online shopping surpassed 30% of UK retail revenue for the first time and, in 2021, this figure rose to 36%.

This was largely due to the closure of brick and mortar stores during the pandemic and the rapid growth of social media shopping with Facebook, Instagram, Snapchat, TikTok, and WhatsApp launching social media shopping features in the past few years alone.

But with 10% of online spending taking place on social media and this figure on track to hit 17% before 2025, social media shopping can spell nothing but trouble for people prone to reckless or impulse spending.

Targeted advertising

For brands, targeted advertising can lead to improved sales and profits with campaigns designed to target a specific demographic.

For shoppers, however, it can lead to overspending with products based on consumer behaviour and a simple tap all it takes to complete a purchase.

It can be difficult to avoid targeted advertising in such a data-driven social media landscape but by changing your privacy settings, blocking third-party trackers, and pausing before you purchase, you can protect yourself (and your finances) from debt.

Social media hauls

In recent years, hauls have become the latest craze to take social media by storm.

This is when influencers record themselves talking their viewers through their latest purchases from specific brands and ask whether each item should be kept or returned.

It might sound harmless enough, but the trend is encouraging ultra-fast fashion and debt with viewers eager to find out what the latest fashion trends are and rushing to splash the cash on a similar size of shop.

This is made worse by the fact that most social media hauls consist of gifted products and designer price tags which, for the average consumer, can be difficult and expensive to emulate.

What can you do?

It can only take a quick social media scroll for you to feel like the only person not splurging on luxury holidays or designer goods. But when it comes to social media, it is important to remember that not everything is what it seems.

If you feel like social media is influencing your spending habits a little too much, there are steps you can take to beat the financial FOMO and, more importantly, avoid debt.

Firstly, never spend more than you earn and pay for items with cash instead of credit when you can to avoid falling behind on your monthly payments and accruing further interest you can’t afford.

Taking a social media detox can also help you resist the urge to splash the cash when your spending is spiralling out of control and avoid being chased for repayments with creditors now legally allowed to privately message debtors via text or social media in the United States.

There is nothing wrong with treating yourself from time to time but if you are worried that you are splurging on social media, taking a step back and reassessing your finances can help you curb your spending before it leads to debt.