If you’re wondering why you’ve been spending more money than you planned to, you may be able to point a finger at all that time you’ve been spending on social media.
According to Gallup, 30% of consumers admit that social media influences their buying decisions. That number is even higher for millennials, at 43%. And a Deloitte survey shows that almost half of millennials use social media as part of their shopping process—and those who do are four times more likely to spend more than they’d planned.
The link between social media and spending goes even deeper, with an AARP study showing that those who spend more time on social networks are likely to have more credit card debt and lower credit scores.
All of that is why Prudential named social media as one of the reasons you need to make a budget, stat, in Four Trends Making Budgeting More Important Than Ever, a new paper from Prudential Research & Insights.
“Budgeting is especially important for younger adults, because it can help them establish a mindset and discipline that can last a lifetime,” states the paper. “In addition, budgeting can help younger adults to start saving early, which makes a significant impact on outcomes.”
“Conversely, the absence of good budgeting in the early working years may lead to financial shortfalls that can derail individuals’ ability to save adequately for retirement and protect themselves against unexpected life events.”
Despite the clear benefits of budgeting to help curb spending, only one-third of U.S. households maintain a detailed budget. More than 60% of Americans don’t have enough savings to cover a $500 emergency. And Prudential’s research shows that 25% of employees spend their entire paycheck.
The other trends highlighted in the paper are an increasingly cashless society, which creates a disconnect between what we buy and the actual money it costs; a shift in employment to temp, part-time, and contract work that is negatively affecting income; and the fact that the cost of major expenses such as going to college and buying a home are increasing faster than income.
The paper also suggests that there are things employers can do to help, such as providing:
- Financial wellness education—either in the office or online
- Budgeting tools that can be personalized and tracked
- Self-assessment tools that allow employees to determine their financial weaknesses
- Solutions that encourage saving, such as student loan repayment programs and employer-matched contribution plans.