Add "FOMO spending" to the list.
In a new study of 1,045 Americans aged 18-34, nearly 40 percent said they have gone into debt just to keep up with their friends' lifestyles. Most commonly, they combat their FOMO--shorthand for "fear of missing out"--by spending on food, travel, clothes, alcohol, and electronics. The study was conducted by research firm Qualtrics and personal finance company Credit Karma.
The good news is that more than half of those surveyed say they spend money they don't have on lifestyle purchases a maximum of once per year. Unfortunately, 21 percent admitted to engaging in FOMO spending at least once per month. More than a third of participants in the study "doubt they can keep up with their friends for another year without going into debt."
The researchers attribute the findings to social anxiety, writing that 36 percent of Millennials "spend money they don't have because they're afraid they won't be included in a future activity if they don't." Among those who go into debt, the report found, 73 percent don't tell their friends about it.
The study suggests a few tips to help Millennials stick to their budgets:
- Be honest with your friends. If you're keeping your financial struggles secret, they might be doing the same.
- Suggest free alternatives. Invite friends over, rather than going out.
- Limit your credit card use. If you rely on cash, you'll only be able to spend a finite amount.