We’ve all self-prescribed a healthy dose of retail therapy. And there’s definitely been a time when we’ve dipped into our rainy day funds when there’s nothing but clear skies.
But there’s a whole other side of spending we need to talk more about: FOMO spending.
FOMO is nothing new in finance. We’ve seen it before with trending investments like cryptocurrency and market events like the GameStop surge of 2021. Over time, like our goals, this fear of missing out evolves based on what’s hot right now.
After browsing r/personalfinance to see what FOMO redditors are combatting today, one of them stood out to: House FOMO. The post has been edited for brevity:
If I Don’t Buy a House Right Now, Am I Missing Out?
"Our original plan was to buy a house this Autumn but now I'm having second thoughts. Our apartment is in a great location and our rent isn't unreasonable, so we are fine with staying here longer. We currently have good credit scores, 5% down payment/closing costs saved up. Our estate agent and bank both say we are good candidates but to be competitive in this market we either have to wait to save more or dip into retirement (I'm not a fan of this).
The original goal was to not spend much more on housing per month than what we are paying now in rent. Right now, with prices going up so fast that goal is almost unachievable without having a one-hour+ commute.
I keep asking myself at what point is getting a house going to be worth it. Truly worth it? Our commutes are 30 minutes or less, we like our apartment location and its amenities, and it keeps our expenses low where we can live off one income.
I don't know what to do. Is this just FOMO?"
It doesn’t take long for FOMO to trickle down from your subconscious and into your wallet. These redditors weighed in on how they combat impulsive spending, from simple social media hacks to tracking tips:
7 Ways to Combat Impulsive Spending
1) "I am in the same boat, in my 20s and really good at spending money I should be saving. The one thing I’ve managed to stop spending on is skincare. The biggest reason is probably because I got off tiktok and instagram. The algorithms are really great at showing you things you'll feel you Need. You do not need them." u/puppyboy420
2) "A baby step you can take is to start looking at how much money you've already spent on something in the past week month or year. Spending $10 here and there on Starbucks doesn't feel like a big deal. Spending $10 on Starbucks when you've already spent $60 on Starbucks that week feels much easier to say no to." u/Dovaldo83
3) "I used to have a client who had a habit of impulse buying. I advised him that when he saw something he wanted to buy he should wait a week. More often than not, if you wait a week you’ll forget the thing even existed. Challenge yourself to go at least one day a week without spending any money. Eat at home, use the library, etc. Teach yourself to find lowering/paying off your debt to be as much of a mood booster as you find buying something to be." u/maccrogenoff
4) "Take your paycheck, less your savings goals and fixed expenses, and divide by the number of days per pay period. This is what you get to spend today. If you've spent it, you're done. If you want something more than that amount, you have to let your available cash building up by going days without spending. And all your purchases round up, never down." u/EmeraldGirl
5) "I look at it from two angles to help curb the spending. One is how much of my time did it take to earn the money I'm about to spend? The other is how much would this money be at retirement if I put it towards that? Those are usually substantial enough to sway me away from spending it." Anonymous
6) "Waking up in the morning, when you know there’s nothing you need to buy that day, make it a goal to not spend a penny." u/SayNoToBrooms
7) "Remove saved credit card numbers from all shopping site accounts. Remove shopping apps from your phone. If you do in-person shopping, do not even allow yourself to drive to/enter the stores. Don’t carry a credit card with you unless you’re traveling and might need it or you will need it for a specific purpose. Store your credit cards in a place that is not easily accessible (e.g., a safe, locked box, somewhere high that would require a step stool to access, etc.). Basically, do everything you can to make it harder to (impulse) shop." u/lilfingerlickinggood
4 More Ways to Combat Spending
Finding the JOMO in finance, or the joy of missing out, is easier said than done. It takes time, practice, and above all restraint. Here are some spending and saving tips from Morningstar specialists, contributors, and guests.
Tip 1: Be You, Spend Like You
Jill Schlesinger, author and business analyst for CBS News, joined Christine Benz and Jeffrey Ptak on The Long View podcast to discuss how people can achieve a better financial quality of life. When the topic switched to spending and budgeting, Schlesinger points out that it really depends on your personality:
"If you go through the process of actually looking at how you are really spending your money, it can be embarrassing. You can put the fun category and just put it out there and try not to judge it.
"Sometimes I’ll tell people to cut back on the analysis and have some fun and spend your money. Because life is short, and that you want to have some fun and you want to have fun along the way. So, what works for you, works for you, and I don’t have a preference one way or the other."
Tip 2: Give Your Money Purpose
Giving your money purpose can help you understand your feelings about how you spend. This episode of Investing Insights with guest Kiersten and Julien Saunders, hosts of the rich & REGULAR podcast touches on why this is so important:
"People who have far more measurable financial wealth than we do come to us asking us for tips on how to live. They don’t quite know. They haven’t learned how to spend. They haven’t learned how to nurture relationships. They have fractured marriages. They have all of these things. They’re suffering from mental health issues, and they don’t really know how to unwind because they spent decades accumulating money. But they have no real way to make a life of it. For me, it’s a matter of knowing how to turn that part off, get outside, which has been a big thing for me, just sort of reconnect with the broader world and use all of those things to create the lifestyle that we have come to appreciate."
Tip 3: Do the Math
Determining your Golden Ratio is one way to figure out how you spend. Behavioural researcher Sarah Newcomb breaks it down:
"Your Golden Ratio is made up of three numbers, representing the percentage of your gross income that goes to:
• The Past: paying for things you bought/did in the past;
• The Present: funding your current lifestyle;
• The Future: accumulating to create future income.
Someone earning $60,000 per year who saves $500/month (the future) and has debt payments of $500/month (the past) would have a Golden Ratio of 10 | 80 | 10. Ten percent of every dollar they earn goes toward debt, 80% is consumed in the present through taxes, groceries, rent, and everything else, and 10% is saved for the future.”
Tip 4: Write It Out
Is an Excel spreadsheet not your jam? Use our budget worksheet instead.
