April 10, 2018
Do you spend in response to social pressure or FOMO (fear of missing out)? Whether it is the cost of an after-work drink, a new outfit for a party, tickets to a concert, the latest smartphone, or an Uber ride, we all ante up in order to be “included” in the experiences of our closest groups of friends.
In fact, nearly 40% of Millennials have spent money they don’t have and gone into debt to keep up with their peers, based on findings of a poll of 1,045 U.S. adults conducted by Credit Karma/Qualtrics.
What’s more, they’re afraid to admit it.
When a friend suggests doing something they can’t afford, 27% of Millennials feel uncomfortable saying “no.” And out of the 39% of Millennials who’ve gone into debt to keep up with their friends, nearly three-quarters (73%) have kept it a secret.
What they may not realize is that some of their friends may feel the same way. Two-thirds of Millennials regret spending more on social situations than they had planned, and one-third (36%) doubt they’ll be able to sustain this lifestyle for another year without going into debt.
This is especially concerning given that Millennial Credit Karma members in the United States each already have $46,713 in debt on average.
Specifically, what do Millennials spend on because they’re afraid to miss out?
- Going out with friends and having a good time is one of the top types of FOMO spending, with nearly 60% buying food, while 33% buy alcohol.;
- Fully 21% of Millennials admit they feel pressured to spend money they don’t have for parties or nightlife.
- Four out of 10 Millennials who overspent to keep up with their friends made travel purchases. That could include a two-week vacation, a weekend trip with their significant other or a trip to attend a friend’s wedding.
- One-quarter of Millennials who have spent too much to keep up with their friends purchased tickets to a music event, while 17 percent attended a sporting event.
But it’s not all about experiences. Many M feel pressured to buy items such as clothes (41%), electronics (26%), jewelry (18%) and cars (16%) even when they can’t afford them.
However, there is some good news: Credit Karma found that more than half of respondents seemed to have their FOMO spending habits under control. Fifty-three percent of Millennials say they make purchases they can’t afford to keep up with their friends no more than once a year, while 25% of respondents say they never make FOMO purchases.
But there’s room for improvement: 25% of Millennials who have a FOMO spend several times each year, while 21% of respondents admit to making these purchases at least once a month.
Credit Karma also looked at how much young Americans typically spend each weekend when they’re hanging out with their friends: Most (69%) spend $100 or less over a typical weekend; while 15% spend between $101 and $250; 16, more than $250; and 7%, more than $500.
These responses don’t account for differences in the cost of living across the country. So while $100 might be a lot to spend in some areas, it doesn’t go as far in other places.
According to Expatistan’s cost of living index, a fancy dinner for two would cost $119 in New York City compared to only $74 in St. Louis. And a cocktail out on the town would cost $16 in New York City but only $8 in St. Louis.
Finally, Credit Karma found that 78% of Millennials who responded have a budget, but 20% of them go over their budget on a monthly basis to keep up with their friends.
Research contact: @Greg-Lull