How Instagram Affects Your Spending

Point of Interest

34% of people have admitted that social media influenced them to spend money that they otherwise wouldn’t spend.

The popular photo-sharing app, Instagram, reached an impressive 1 billion users in June 2018. With access to so many people across the globe, advertisers are using the platform to drive marketing and boost sales. While Instagram marketing is effective, it can cause some to spend more than they want to. Impulse buys, influencers and shopping traps may be great for retailers, but these strategies can cause significant issues for budgets and responsible spending.

How social media marketing could be affecting your spending

According to Charles Schwab’s 2019 Modern Wealth Index Survey, social media marketing has a big effect on spending habits. The study found that 34% of people admitted that social media influenced them to spend money on experiences they saw online. When you look specifically at millennials and generation Zers, those numbers jump to 49% and 44%, respectively.

This isn’t a problem as long as you have the money budgeted for these experiences and purchases. However, 59% of Americans are living paycheck-to-paycheck, only 38% have an emergency fund and almost 44% are carrying debt by way of a credit card balance.

Various forms of social media regularly and often expose people to products and experiences their friends are using. Those trying to limit their spending may find the temptation too great to avoid when confronted with it constantly.

The rise of Instagram influencer ads and marketing

It’s not just your friend’s photos that may be contributing to spending problems. Social media marketing has given birth to “the Instagram influencer.” Influencers are people with large followings online that demo or promote products or experiences to their followers in exchange for compensation.

According to a 2019 survey of marketers, influencer marketing is big and will be getting bigger in 2020. 65% of companies surveyed say they plan to increase their influencer budget this year. How big are those budgets? The largest chuck, at 19%, are companies spending between $1,000 and $10,000 annually. Behind that is 18% of companies were spending between $100,000 and $500,000 annually.

Is it working? According to the same survey, 89% of marketers say the return on investment (ROI) from influencers is comparable to or better than other marketing channels. Of the companies surveyed, 34% marked it as ‘Better,’ and 14% marked it as ‘Much Better.’

While influencers exist on all forms of social media, Instagram marketing heads the pack. The survey found that 89% of marketers selected the channel as the most important form of social media for influencers.

Social media and other online shopping traps

If the ads aren’t enough to get you buying, social media platforms have made it even easier. Instead of seeing an ad and having to go to a website or a store to make a purchase, users can now purchase without ever leaving the platforms. Features like Instagram Shopping and Facebook Marketplace are removing one whole step of the purchase process, making buying even easier.

While many platforms keep exact profit amounts close to the vest, analysts expect revenue from these digital marketplaces to be in the billions. Deutsche Bank’s analysts expect Instagram Shopping will generate $10 billion in revenue in 2021.

Yes, these digital marketplaces are great for convenience and for those with the disposable income to make purchases. However, it can create issues for those that love to shop but are trying to curb spending.

What makes things even tougher are targeted advertisements. Social media companies have an immense amount of data on users. They leverage this data to show you the exact ads for products and experiences you are most likely to be interested in. Again, great for those looking to spend some money, but a potential pitfall for those trying to stay on a budget.

How to curb impulse buying on social media

For those looking to curb impulse buying on social media, there are some effective strategies you can use that may help.

Unfollow influencers

You’ll want to unfollow any influencers pushing products you’re interested in buying. Saying no to a generic ad may be easy, but when you’re getting pushed products from a face you know and recognize, it may be more challenging. If knowing what a celebrity halfway around the globe is doing is more important than your financial peace, you may need to take a longer look at your priorities.

Add an extra layer to the process

Don’t store any payment information on any accounts. Additionally, don’t surf with your credit card close by. By keeping your method of payment somewhere else, you add steps you have to take to make a purchase. The walk to get your purse or wallet may give you the time needed to second-guess the purchase.

Post your budget close by

Social media can lead us to forget about the real world at times. When we do this, we may forget about our financial goals, budgets, and what we may be saving for. If you feel like this may be an issue for you, keep a copy of your budget close to your computer. Or you can use sticky notes to remind you of your financial goals, so you don’t go astray. A small reminder when the impulse to buy is high may be all you need to make the right decision. 

Limit or eliminate social media

If you’re still having problems, though, you may need to limit your social media time or eliminate it. It ultimately comes down to how big of a problem it is. If you’re only spending a few bucks extra and it’s not heavily impacting your budget or ability to meet other financial commitments, a few small tweaks should work.

If you’re having serious problems with control, though, you may need to delete the apps from your phone and eliminate social media from your life. It all comes down to priorities. If your budget, financial independence, and fiscal responsibility are more important than scrolling through social media, you should cut it out.

Social media marketing is here to stay, and all signs point to continued growth for years to come. If you’re able to keep your spending under control, that’s no big deal. But for people struggling with some impulse control and heating up the credit card, you may need to make some changes to protect your budget.

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