A reality check on financial FOMO

by Ann deBruyn

A person sits before a laptop with a rising graph on the screen.

Photo by Mikhail Nilov from Pexels

Do you ever feel like you’re missing out on easy money? With so many amateur investors offering financial advice, sharing tips on stocks and cryptocurrencies, and pumping up non-fungible tokens (NFTs), it’s easy to think you’re the only one not cashing in.

Yes, some people have made money by following these and other investing trends, but building wealth isn’t about joining the latest meme stock craze. It’s about developing healthy financial habits and sticking with them over time. Plus, don’t let your FOMO (fear of missing out) fool you—some social media influencers seem rich, but sometimes appearances can be deceiving.

Lifestyle envy is nothing new, of course, but social media has put it into overdrive. Raia Carey, a certified life coach and spokesperson for Capital One Canada who has partnered with them to share tips on how to achieve greater wellbeing, including financial wellness, says that social media can alter our expectations of reality. As a result, we often think that we’re missing out on things whenever we log off or put our phones down.

The addictive nature of social media, combined with rising financial worries and housing unaffordability, are driving the appeal of easy-to-use online investment platforms, especially among younger people.

Before you follow an influencer’s advice or invest your hard-earned money, think about these fundamentals:

Consume critically

Most influencers only show a curated aspect of their lives: the glamorous, successful parts. Keep that in mind when watching and reading their posts.

Seek out expert advice if you want to learn more about a subject, says Carey. “And, instead of thinking about influencer content as ‘this is bad vs. this is good,’ shift your mindset. Think ‘cool, love that.’ That’s something I’m interested in.’” Then, she says, “Check it over with someone you trust who may be a little bit more informed on those topics than you.”

Do your research

If you’re interested in investing, get information from different sources, such as investment advisors and financial journalists. If you do invest, consider starting with a small amount of money. Remember that while some people made a lot of money buying meme stocks, a lot of people did not.

Have a savings plan

If there’s one financial lesson we’ve learned from the last two years, it’s that having an emergency fund or a savings cushion is important. If possible, put away a small amount each week or each month.

Here’s a simple but effective strategy: Decide how much you want to save for the year and break it down by month, then by paycheque. Deposit the money into a separate account just for your savings. Setting up automatic contributions can help you stay on track—if you don’t see the money, you’re less likely to spend it.

Use credit wisely

Credit scores can play a key role in financial wellbeing. Your credit score—a number typically between 300 and 900 that Canada’s credit bureaus update throughout the year—may tell potential lenders, property owners/managers and employers how “creditworthy” you are. Making your credit card payments in full and on time helps to keep your credit score in good shape. (Learn more about improving your credit score.)

If you can’t pay your entire balance each month, you’re not alone—many of us are in this boat. Try to make at least the minimum payment on time to avoid additional interest charges, and adjust your spending in the following months, so you are able to clear your balance.

It’s also a good idea to limit how many credit cards you apply for—each application can impact your credit score. Capital One has a simple online tool called Quick Check, which shows you which of their credit cards you will be approved for before you apply. And there’s a bonus: using this tool won’t impact your credit score.

Avoid making emotional decisions with your money and investments

This is easier said than done. FOMO is tied to powerful emotions including envy, fear and apprehension. Money and investing can be emotional, too, and you may feel pressured when your favourite influencer or a friend is urging you to make a decision now, now, now.

Good money habits include managing the emotional stuff—as well as taking the time to set a good financial foundation of saving, smart credit use and research.

For more ideas about financial wellness, visit the Capital One Life Credit blog.