FOMO Is Keeping You Poor

FOMO, or ‘fear of missing out’ is one of the latest acronyms that has become very popular amongst millennials, the acronym-loving generation. This simple acronym truly embodies the younger generation’s attitude towards life in general.

I fear that this seemingly harmless acronym, and other ones like it (YOLO), actually creates a mindset where people justify abnormally expensive purchases by saying it is a ‘once in a lifetime experience’.

Trust me, you can afford to miss the latest EDC concert or the next girl’s night out. What you cannot afford is to miss out on opportunities to save and/or invest money.

Paying For Experiences

Experiences are arguably the number 1 most expensive thing we spend our disposable income on. Whether the experience is a Michelin Star restaurant, a vacation to Hawaii, or a ticket to the movie theater, these types of luxury goods are expensive and should be consumed in moderation.

The problem with EDC, exotic vacations, skydiving and other ‘experience’ driven commodities are that these products have no monetary value once the experience is over. Unlike a T.V. or a bicycle that has an actual resale value on the market, these experiences leave our bank accounts empty at the end of the day.

There is absolutely no way to monetize these costly experience based products. In other words, the ROI is non-existent.

Once your high from the ‘molly’ has worn off and the concert is over, there is very little to show for the ticket price of anywhere from $300 to $1,000 (not including the flight). If the memory of having a DJ play pre-recorded music from his laptop is worth the $300, then I suggest you spend your money how you want.

Whatever your vice may be, realize how much we pay for experiences now. Instead of spending several thousands of dollars on a one-off vacation or concert, that money could be the start of your investment portfolio.

Social Media Pressure

The phrase “Keeping up with the Jones’s” has been embedded in American culture ever since people began living in suburbs instead of farms. The move to the suburbs allowed households to see their neighbors’ latest cars, toys, and/or any other extravagant purchases. As people begin to see their neighbors purchase these goods, they associate success with consumerism.

“Keeping up with the Jones’s” has mutated into a new form of social pressure with apps like Facebook, Instagram, Snapchat, and Linkedin becoming ever more popular. With these apps, we are now able to have a window into our friends’ lives, coworkers’ lives, and family members’ lives.

People only post the best part of their lives on social media, thus creating a very real difference between our Instagram curated lives and our real lives. As ‘fun’ and ‘harmless’ as social media seems, there are a lot of negative externalities that are not accounted for when scrolling through your Facebook feed, or other apps like it. Seeing your closest friends going on exotic vacations, buying expensive rocks, or even eating an avocado toast at the local cafe can create a real feeling of jealousy.

Seeing people in your life consuming more on social media is nothing more than a facade of normal people living a luxurious life. When browsing through your friend’s personal life on your phone, try to remember that what you are seeing is only a mirage of a perfect life.

Avoid the temptation of buying expensive experiences just to keep up with your friends’ social media accounts.

Party on a budget – Pregame, Hostels, and Dinner Parties

Whether you are planning an extravagant bachelor party or a Sunday brunch with close friends, it is important to make these purchases frugally. You don’t have to “miss out” on experiences simply to save money. I argue that we can all partake in experiences while continuing the journey to Financial Independence.

There is no reason why a night out should have all of the alcohol consumed within the venue. If you ever plan to have a night out where there will be heavy drinking, then consider pre-gaming at home! Buy a bottle of liquor and invite people over to your house to have a pregame session. This pot-luck attitude to partying is what the frugal life is all about.

Perhaps, you are not a heavy party-goer. You may enjoy traveling or extravagant family vacations. Try booking a hostel or reasonably priced Airbnb to live in instead of an expensive hotel room, which is only used for sleeping. Try booking off-season when flights are cheaper. Try doing a home-exchange program where you can stay in a stranger’s home in a foreign country while that same person stays in your home. Try renting out your apartment while you are on vacation to make up for some costs. 

Even for the average American who dines out of the house more than half of the time, there are huge savings to be had eating at home with friends.  Instead of going out to a local cafe and spending $15 on brunch per person, try inviting your friends over to have a home cooked brunch where $15 can feed everyone invited.

There are endless ways in which we can “re-think” and restructure our mindset to save money and achieve Financial Independence. All you need to do is try.

-Jack

 

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19 comments

  1. Many, if not all, of my most valuable experiences involve people and relationships. I try to remember that “staying home” on a Saturday playing games with my step-kids allows me a deeper relationship with them. Even just having a routine with them, making them breakfast, helping them run baths, etc. is part of our relationship and our closeness.

    I do think being in different locations (traveling) and attending special events is a good way to get to know another side of people, so that is important too.

    I guess it’s about balance.

    Liked by 2 people

  2. Great to read. I recently followed you as you have many great posts to read! I’m just starting my journey to financial independence and I’m trying to learn as much as I can, thanks and keep posting great stuff!

    Liked by 1 person

  3. I have to confess that I’m guilty of this as well, and I’m not even a millennial. I recently went on a vacation and I’m still paying for the financial cost of that expensive trip. Because I rationalized my spending with YOLO, I incurred way more debt than I would have liked.

    While I do believe that we should still try and enjoy life today, as tomorrow isn’t guaranteed, moderation is the key.

    Liked by 1 person

  4. I have two friends that have very compelling counter arguments to this philosophy. One argues, why would you spend your life saving when you will just end up on your death bed, reflecting on all of your missed experiences. To this I simply respond, saving affords you financial independence so you can amplify your experiences at the cost of postponing said experiences. The other friend similarly argues, “What if your life is cut short and you never reach that financial independent phase of your life and consequently never have those experiences?”. To this I had no counter argument until now. I like how you suggested creating budget experiences like eating brunch at home. Great article!

    Liked by 1 person

  5. Agreed. I think the biggest thing is the missed opportunity cost. It doesn’t have to be all or nothing. I think anything too extreme (either side of the spectrum) can be bad. But it needs to be within reason and some stuff need to be prioritized (i.e. CC debt).

    Liked by 1 person

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