Millennials and Gen Z are spending a lot of money because of social media

American’s spending was fueled by what they see their friends doing, especially on social media, the 2019 Charles Schwab Modern Wealth Survey revealed.

Fifty-seven percent paid close attention to how their friends spent their money.

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Millennials and Gen Z were especially influenced by seeing how their friends spent their cash on social.

While 34% of people were likely to spend money on an experience because of something they saw on social, 44% of Gen Z was, as was 49% of Millennials. The number dropped significantly – to 28% – when it came to Gen X.

The younger generations were similarly susceptible to spending money when it came to their friends. While 35% of the population overall said they were more likely to spend more than they can afford to do stuff with friends, Gen Z was 41% likely, and Millennials were a whopping 48% likely.

“Younger generations have grown up with social media as a reference point for their lifestyle and spending decisions,” Millennial money expert Stefanie O’Connell told Ladders. “By contrast, when older generations were growing up, the reference point for comparison was generally limited to their immediate surroundings. The neighbors next door are far more likely to be in a similar socioeconomic class than the celebrities and influencers on social media that younger generations now have as a primary point of comparison.”

“I think we’re susceptible to more social spending because we see more of it, multiple times a day, with our smartphone always in the palm of our hands,” O’Connell continued. “And on those devices, we’re comparing ourselves more and more often to people with means very different from our own.”

FOMO’ Money

A full 60% of Americans of all ages wondered about how their friends could afford the expensive experiences they posted to platforms like Instagram, and 35% thought social media had the most negative influence on their money management.

To be sure, many of us have been baffled while scrolling through our Instagram feeds about how our friends paid for that lavish hotel, restaurant, or vacation. But O’Connell said it’s more about valuing experiences:

“While social presences are certainly curated, and decisions are undoubtedly influenced by what we see on social (for example, traveling to a destination because of photos you’ve seen of it on Instagram), I don’t think the desire to share on social is the primary reason for those spending decisions, at least not most of the time. We do know that younger generations genuinely value experiences.”

Their family (62%) and friends (41%) had the most positive influence, respondents said.

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