Social media has become an integral part of our daily lives. It provides a platform for communication, entertainment and shopping. Millions of users monthly, social media platforms such as Facebook and Instagram are powerful tools for brands to reach their customers. Consequently, the convenience of social media comes at a price, and it’s not only the data or various subscriptions. It has started impacting the wallets of the consumers and has led to more individuals and families falling into dangerous spending habits. 

How Social Media Can Impact Your Finances

With the rise of e-commerce brands, they now have the ability to market their products and services directly to you. This means that you, as the consumer, sit with all the purchasing power in the palm of your hands. But what does this mean in terms of your finances? As brands utilise social media to advertise their products, you are almost instantaneously drawn in. With reference to Nosto.com, “78% of consumers say companies’ social media posts impact their purchases”. This means that you are most likely to be influenced to purchase a product or a service from a brand or company. 

CanSocial Media Influence You To Keep Up With Your Friends? 

Social media may influence you to keep up with your friends and family. This can have a significant and negative impact on your financial well-being and could lead to you spending unnecessarily. This behaviour could ultimately result in you using debt to cover your monthly expenses. This is more commonly known as keeping up with the Joneses. 

If you are tempted to keep up with your friends, family or influencers, you can do the following:

1. Remind yourself to live within your means and avoid measuring self-worth with material items.
2. Be aware that every person’s financial situation is unique.
3. Know and remind yourself of your financial goals and objectives.
4. Avoid shopping online or unfollow certain brands if necessary.
5. Keep track of your spending every month.
6. Utilise a strict budget for yourself or family.
7. Focus on growing your net worth through saving and investing.

What Effect Can This Have If You Already Have Debt?

Trying to keep up with Joneses can lead you to fall into more debt if you are utilising personal loans, credit cards, overdrafts or store accounts. Therefore, with more credit being utilised, your monthly liability towards repaying those accounts increases. This can lead to a shortfall in your monthly budget. With a shortfall, it can force you to use more credit in order to cover your monthly expenses in the future. This is known as a debt-cycle.

What Can You Do To Avoid Spending More Than You Can Afford? 

It’s important to know what you are spending money on each month. Without this knowledge, it would be extremely difficult to understand what you can reduce or completely cut from your expenses. Additionally, you can also use the 30-day rule to defer from all impulse buys and non-essential spending. Following this rule means that you have 30 days to decide whether you really need the product or service. After the 30 days have passed, if you really need it, then you may purchase it. 

According to RamseySolutions.com, using the following tips will help you reduce some of your expenses each month:

1. Tracking your spending each month.
2. Utilise a monthly budget and try to stick to it.
3. Reduce unnecessary and luxurious spending.
4. Prioritise your debt repayments. 
5. Set out bite-sized financial goals and objectives.

On Social Media, Try To Follow Financial Accounts & Financial Experts

Subsequently, with the power of social media, there are generally a number of individuals who share their knowledge with others in order to educate individuals about finances. Following some financial accounts or financial experts can provide you with some finance tips and tricks that you could use everyday. If you wish to learn more about finance in South Africa, follow us on Instagram and Facebook. 

What Formal Debt Solutions Are Available To South African Consumers? 

There are a few formal debt solutions available to South African consumers that can assist you in reducing your monthly instalments and interest rates to a more affordable and manageable amount.

1. Debt Consolidation Loan – this is essentially a lump sum loan that is used to pay off debt. This results in you only having to repay one instalment each month. However, there are strict industry requirements that need to be met in order to qualify. Interest rates on these loans are typically high due to the risk profile associated with this product.
2. Debt Counselling – this is a legal process whereby the debt counsellor can renegotiate your instalments and interest rates with your credit providers. This can reduce your monthly instalments to a more manageable and affordable repayment. With the debt counselling process, all your debt is consolidated into one payment. With debt counselling, those who are over-indebted can qualify for this rehabilitation product.

If you are currently struggling with your debt or needing assistance, contact us. Our debt experts will guide you through one of our free financial assessments in order to see how we could assist you in becoming debt free!