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Deloitte’s 2025 Digital Media Trends survey indicates that the average American spends nearly one hour daily on social media platforms, with Gen Z and millennials leading in engagement. Though scrolling may seem like harmless entertainment, your habits on these platforms can significantly influence your buying and saving behaviors.
Personal finance guru Rachel Cruze recently shared valuable insights in a YouTube video about how social media algorithms can undermine your financial well-being. She outlined three crucial ways these algorithms can encourage impulsive spending and provided actionable advice to mitigate unintended purchases.
Understanding Your Weaknesses
After engaging with a post, you might notice a shift in your feed that teems with similar content. This phenomenon illustrates how social media platforms analyze user data to pinpoint personal weaknesses.
According to Cruze, these platforms curate your feed based on what they perceive you’ll find interesting. As a result, you may be tempted to purchase items or fall into the comparison trap, especially when influencers flaunt luxurious lifestyles. This can lead to increased spending on products you don’t necessarily need.
The Fear of Missing Out (FOMO)
The algorithms that guide your feed can create a heightened sense of urgency. “Once the algorithm identifies your interests, it will bombard you with posts which might make you feel like everyone is partaking in exciting experiences,” Cruze elaborated.
This unrealistic perspective can lead to overspending on wants—be it the latest tech gadget, a trendy beauty product, or a lavish vacation, all to avoid missing out on what others seem to be enjoying. For instance, Cruze cited her own curiosity sparked by the mushroom coffee trend due to its touted health benefits.
Discovering Hidden Expenses
One of social media’s compelling features is its ability to introduce users to previously unknown products. However, this can also trap you into unnecessary spending.
Many items featured on social media are nonessential. As Cruze mentioned, viral products like Stanley cups or the Labubu doll trend exemplify this phenomenon. The convenience of purchasing these items directly through social media apps has made impulsive buying easier than ever, with a 2024 Salsify report revealing that approximately one-third of shoppers made purchases via social media platforms.
Strategies to Safeguard Your Finances
To combat the allure of impulsive spending fueled by social media, Cruze recommends following these practical strategies:
Firstly, take a moment to pause before making a purchase. The immediate excitement can cloud your judgment. In her experience, Cruze often leaves items in her cart for a few days, during which time she typically reassesses and ultimately decides to purchase only a fraction of them.
Next, evaluate whether the item is genuinely innovative or simply a duplicate of something you already own. For example, realizing you have a similar shirt or pair of shoes may diminish the appeal of a potential purchase and encourage you to save your money instead.
Lastly, consider more drastic actions, such as temporarily avoiding certain apps or selectively unfollowing accounts that negatively impact your spending habits. This break can help you reassess how these influences affect your budget and purchasing behavior. Cruze points out, “If you remove the constant stream of temptation, you’ll experience more contentment when you’re not aware of everything on the market.”
By being mindful of how social media affects your finances, you can take a proactive approach to safeguard your budget while still enjoying the benefits that these platforms offer.
This article originally appeared on GOBankingRates.com: Rachel Cruze: 3 Ways the Algorithm Sabotages Your Spending (and What To Do)
