Saving & Spending

Saving is losing the ‘visibility’ war with spending

OPINION: What you see is what you get.

It’s a decades-old advertising catchphrase, but when it comes to social media it may be more of a case of “What you see is what you buy”.

A recent study suggests people are spending more, and saving less, because they are confronted with so many images of other people’s consumption on social media.

Images from other people's lives can change our expectations of what is "normal".

Getty Images

Images from other people’s lives can change our expectations of what is “normal”.

Consumption comes at the expense of saving, but savings are intangible. New clothes, cars, meals at fancy restaurants and overseas holidays photograph well. Savings don’t.

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* Losing control of hobby spending

We humans suffer from something known as “visibility bias”.

We have a tendency to think something is normal, or acceptable, or safe, if we see lots of other people doing it.

Visibility bias may have evolved in us for perfectly good reasons, helping our distant forbears to stay alive in the wilds of pre-modern Africa, but it’s not a help on social media where we have visibility on spending, but not saving.

How do you fight back?

Unfortunately, nobody’s going to do it for you.

It would be ideal if everybody’s Facebook and Instagram profiles included the value of people’s assets, the size of their debts, and their net wealth.

Then we could really see whether that “social media influencer” in designer jeans boarding the plan to Bali is wealthy, or just hugely indebted.

Social media "influencers" like Youtube star Shaaanxo, aka Shannon Harris make their money by trying to influence us to spend money on things that are unlikely to make us happier.

Supplied

Social media “influencers” like Youtube star Shaaanxo, aka Shannon Harris make their money by trying to influence us to spend money on things that are unlikely to make us happier.

One strategy could be to build a visibility bias counter-balance into your social media life.

Join a frugal Facebook group so you get savings and frugality posts in your feed providing a counterbalance to the consumer deluge from everyone else you are linked to.

I’m sure there’s a bit of fake frugality on social media, but joining a thrift group or two could help stop you from getting yourself into a terrible cycle where you and all the people you know reflect each others’ habits, and amplify each others’ behaviour without any counterbalance.

Social media is a platform on which we "curate" our lives, presenting the image we want others to have of it. UK charity Relate claimed last year that half of millennials portrayed their relationships as better than they really were.

123RF

Social media is a platform on which we “curate” our lives, presenting the image we want others to have of it. UK charity Relate claimed last year that half of millennials portrayed their relationships as better than they really were.

Another strategy is to use your brain, and research skills, to get some visibility on everyone’s savings habits, and work out the money strategy that makes you happy.

Though this sounds easy, en masse, people aren’t that good at it.

There’s hardly an adult in New Zealand who does not know what a healthy diet looks like. It hasn’t stopped us becoming a top 10 nation for obesity.

Research is pretty clear that wellbeing and savings are clearly linked, as are consumer debt and misery.

On a 100-point scale ANZ-sponsored research showed a marked 17-point increase in people’s feeling of financial wellbeing between those with less than $1000 in savings, and those with $1000-$4999 in savings.

The difference in wellbeing was even larger between people with consumer debt, and people without it.

Money may buy a handbag, but savings buy you wellbeing.

These kinds of insights provide some visibility into saving behaviour, and most importantly, the saving behaviour of people with higher levels of financial wellbeing.

On a national scale our household savings rate is not very flash, but there are plenty of people whose savings habits are making them happier.

We should all get a better visibility of their habits.

GOLDEN RULES:
* Don’t be a ‘visibility bias’ victim
* Seek a counter-balance to consumption saturation
* Join the 1.68 million regularly saving into KiwiSaver

Source

neallesh@yahoo.co.uk

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