In the age of social media and constant connectivity, two acronyms have become cultural phenomena that influence how people live, make decisions, and manage their finances – YOLO and FOMO.
YOLO, an acronym for ‘You Only Live Once’, has become a mantra for many, encouraging a life of spontaneity and risk-taking. FOMO, which stands for ‘Fear of Missing Out’, captures the anxiety that arises when one feels left out of exciting experiences or trends others enjoy.
While these concepts may inspire individuals to live more fully, they also have significant implications for financial behaviour, often leading to impulsive spending, debt accumulation, and long-term financial instability.
To understand the financial impact of YOLO and FOMO, it is essential first to define these terms and explore their origins and meanings. Generally, YOLO emerged as a popular phrase in the early 2010s, capturing the idea that life is short and, therefore, one should seize opportunities as they arise.
It encourages a mindset of living in the moment, often without regard for long-term consequences. The phrase gained widespread popularity through social media, music, and pop culture, becoming a rallying cry for a generation that values experiences over material possessions.
YOLO promotes the idea that one should not let fear or hesitation prevent them from pursuing their desires, whether travelling the world, starting a new venture, or indulging in luxury purchases.
On another note, FOMO is the uneasy and sometimes all-consuming feeling that others might have more rewarding experiences, leading to inadequacy or exclusion. This fear is often exacerbated by social media, where people are constantly exposed to the highlights of others’ lives – vacations, parties, career achievements, and more.
FOMO can drive individuals to engage in activities or make purchases they might not otherwise consider, to avoid being left out. It is a form of social anxiety that can lead to impulsive decisions, particularly in the realm of spending. Both YOLO and FOMO are rooted in the desire for a fulfilling life, but they manifest in ways that can have detrimental effects on financial health in the long run.
The three negative impacts of YOLO and FOMO on consumers’ income are:
Impulsive spending and debt accumulation
YOLO often justifies impulsive purchases and risky financial decisions with the rationale that life is short and should be enjoyed to the fullest. For example, someone might splurge on a luxury vacation, designer clothes, or the latest tech gadget, reasoning that these experiences or items are worth the expense because of YOLO, leaving them to deplete savings and create a debt-living cycle.
Moreover, FOMO exacerbates this issue by creating a sense of urgency to keep up with others. The constant exposure to others’ lifestyles on social media can make individuals feel that they must also partake in expensive activities or make high-end purchases to avoid feeling left out. This can lead to overspending on things like dining out, attending events, or buying the latest fashion trends – all in an attempt to maintain a certain social image. The result is often a drain on financial resources, leading to increased debt and financial stress.
Undermining long-term financial goals
The YOLO mindset often prioritises immediate gratification over long-term financial planning. For instance, someone who frequently justifies expensive purchases with YOLO thinking may have little to no savings for retirement, emergencies, or other future needs. This can lead to a reliance on credit or loans, further exacerbating financial strain.
FOMO can similarly derail long-term financial goals. For example, someone might spend money on a spontaneous trip with friends instead of contributing to their retirement fund or paying off debt. While these experiences may be fulfilling in the short term, they can hinder achieving financial stability and long-term goals.
Increased financial stress and anxiety
Both YOLO and FOMO can contribute to heightened financial stress and anxiety. The pressure to live fully and keep up with others can lead to a cycle of overspending, debt accumulation, and financial instability.
This, in turn, can create a sense of financial insecurity and stress, which can affect overall wellbeing. The constant need to keep up with the latest trends or to live life to the fullest can lead to feelings of inadequacy and dissatisfaction, particularly if these behaviours result in financial difficulties.
Moreover, the financial strain caused by YOLO and FOMO can have broader implications, affecting relationships, mental health, and overall quality of life. The stress of managing debt, struggling to make ends meet, or feeling financially unprepared for the future can take a toll on an individual’s mental and emotional health, leading to anxiety, depression, and strained relationships.
Five ways to control YOLO and FOMO:
1. Create and stick to a budget
Budgeting is a powerful tool for managing finances and controlling impulsive spending. By creating a budget, you can allocate a portion of your income for essential expenses, savings, and discretionary spending. This helps ensure that you live within your means and prioritise financial stability.
Sticking to a budget requires discipline, but it can help prevent the financial stress associated with YOLO and FOMO-driven spending.
2. Practise mindful consumption
Mindful consumption involves being intentional about your spending decisions and considering the long-term impact of your purchases. Before purchasing, ask yourself whether it aligns with your values and long-term goals.
Consider whether the item or experience is something you truly want or need or if YOLO or FOMO drives it. Practising mindfulness can help you make more deliberate and thoughtful financial decisions, reducing the likelihood of impulsive spending.
3. Limit social media exposure
Social media is a significant driver of FOMO, as it constantly exposes users to the curated lives of others. Limiting time spent on social media can help reduce the influence of FOMO and the pressure to keep up with others. Consider taking breaks from social media or curating your feed to include content that inspires and uplifts you, rather than triggering feelings of inadequacy or envy.
By reducing exposure to the highlight reels of others’ lives, you can focus more on your values and goals rather than feeling pressured to conform to external expectations.
4. Focus on experiences, not material goods
One way to embrace the positive aspects of YOLO without falling into financial pitfalls is to shift your focus from acquiring material goods to creating meaningful experiences. Research has shown that experiences like travel, hobbies, or spending time with loved ones tend to bring more lasting happiness than material possessions.
By prioritising experiences over things, you can enjoy a fulfilling life without the financial burden of constantly acquiring new items. This approach aligns with the true spirit of YOLO – living a life rich with experiences rather than accumulating possessions.
5. Seek financial education and advice
Educating yourself about personal finance and seeking advice from financial professionals can help you make informed decisions and avoid the pitfalls of YOLO and FOMO. Understanding concepts such as budgeting, saving, investing, and debt management can empower you to take control of your finances and build a secure future. Financial literacy is a key component of resisting impulsive spending and making decisions that align with your long-term goals.
In a world where YOLO and FOMO are pervasive, everyone needs to understand their negative consequences. Acquiring knowledge and practice to manage YOLO and FOMO is critical for someone who is addicted to them.
Dr Abdul Rahman Zahari is a senior lecturer at Universiti Tenaga Nasional Business School.
The views expressed here are the personal opinion of the writer and do not necessarily represent that of Twentytwo13.
