Social media impacting people's financial mindset

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Posted at 11:29 AM, Jul 19, 2022

Social media can cause negative feelings, but it may impact your feelings about money more than you realize.

A report from Bankrate finds people are more likely to feel more pessimistic about their financial situation than any other aspect of their lives because of media posts. That's more than their appearance, career success or living situation.

What tricks the mind is when you're staring directly into the face of somebody, your brain tells you that this is an intimate connection. This is somebody that, you know, somebody that you should be relating to,” said Brad Klontz, a financial psychologist. “And so that's where our sense of status and our sense of relative deprivation, which is what it really comes down to in psychological terms, that's what gets triggered."

He said one of the best ways to counteract the social media effect is to understand how people become wealthy and how they spend their money.

“What you're gonna find is that it's the opposite of what you see on social media,” he said. “Studies show that people who show status and like to show how much money they make, they actually tend to have less money and less net worth.”

More than 60% of parents with kids under age 18 also believe social media has contributed to their children having unrealistic expectations about money.

“They're trying to sell you a concept, an idea that's very attractive to everybody when you're young,” Klontz said. “You don't necessarily have the right perspective and understanding to realize that you're being manipulated by those posts.”

He said the best thing you can do is talk with your kids about money.