The Hidden Costs of Social Media: Impacting Your Finances and Mental Health

A client came to me recently, visibly upset. As we sat down, she looked at me and simply asked, "What am I doing wrong? Have I been going down the wrong career path? Are my investments not generating enough returns? I don't get it." To be honest, I was confused. Here was a 32-year-old with an investment property (with a manageable mortgage), no other debt, over ￡100,000 in investments, and a healthy buffer in the bank. I told her, "You're doing very well. I don't understand what you mean."

She sighed and explained, "Every time I go on social media, I see people my age and younger living these incredible lives—luxurious holidays, flashy cars, dining at exclusive restaurants, all while flaunting Patek Philippes and Birkins. Meanwhile, I'm working hard, and it feels like I'm falling behind."

This caught me off guard because the reality is, she's in a much better financial position than most. The average savings for someone her age in the UK is just ￡4,775. Yet, despite being well above average, she felt inadequate. This interaction got me thinking—if someone like her, who is doing quite well, feels this way, what about those who are genuinely struggling? How does social media affect their perceptions and financial decisions?

In today’s digital age, social media is far more than just a place to share photos—it’s a powerful driver of our financial decisions. A staggering 79% of users admit to making purchases influenced by online content, with viral trends boosting sales by up to 500%. But this convenience comes with significant hidden costs: the toll on our finances and mental well-being.

The Illusion of Wealth and the Pressure to Keep Up The world we see reflected on social media is often a carefully curated illusion. Many people showcase lifestyles that appear luxurious, but the reality is often quite different. It’s common for individuals to live beyond their means just to keep up appearances, trying to illustrate wealth that doesn’t truly exist. This false portrayal creates immense pressure on others to spend money they don’t have, just to fit in or project a similar image of success.

Whether it’s the latest must-have item on TikTok or paying exorbitant prices for Oasis reunion tour tickets, the fear of missing out (FOMO) and the desire to keep up with this illusion can push us into making purchases we simply can’t afford. This isn’t just about splurging occasionally; it’s about the ongoing pressure to maintain a fa?ade, which can lead to serious financial trouble.

The Double-Edged Sword of Social Commerce With features that allow instant purchasing, platforms like Instagram have transformed how we shop. But while this seamless integration makes buying easier, it also encourages impulsive spending. Studies show that 57% of Gen Z shoppers have made unplanned purchases directly through social media, often exceeding their budget. The ease of these transactions can lead to accumulating debt before you even realize it, all in the name of keeping up with a lifestyle that might not even be real.

The Mental Health Toll Beyond the financial impact, there’s a psychological cost. Constant exposure to idealized, yet often fake, lifestyles can create feelings of inadequacy and drive further impulsive spending as we try to match what we see. We feel that we are doing something wrong, is everyone like this? Holidays to far off places, fancy lunches and luxury watches. I've had more than my fair share of conversations where people think this is the norm and that they're vastly below-average. This is not the case and usually these people, in my experience are swimming in debt. However this causes, as you can imagine, a lot of stress and pressure. Over time, this stress can lead to anxiety, depression, and other serious mental health issues, particularly when combined with the financial strain caused by overspending.

The Value of Guidance Having someone to guide you through these challenges can make all the difference. A financial advisor helps keep you grounded in reality, ensuring you stick to your financial plan and avoid the trap of mindless spending. With a specific target in mind, you’re less likely to be swayed by fleeting trends or false portrayals of wealth and more likely to make decisions that truly align with your long-term goals. There’s a real sense of satisfaction in knowing you’re making the right choices for your future, based on your actual needs and aspirations, not the illusions presented online.

Taking Back Control To counter the effects of social media on your finances and mental health, it’s crucial to be mindful of your spending habits. Pause before making a purchase and consider whether it aligns with your financial goals. Regular digital detoxes can also help you regain perspective and focus on what truly matters.

In a world where social media constantly nudges us to spend, being proactive about your financial and mental health is more important than ever. With the right guidance and a clear plan, you can protect both your wallet and your well-being, ensuring your decisions support your long-term success, not just momentary satisfaction based on a false reality.