Beware: debt is often no more than a click away

These days debt is just a click away as everybody buys online where it is just so much easier to spend on impulse as you react to smart advertising in online shopping malls available in your home 24 hours of every day.

“Once upon a time, it was easy to see when you were about to get into debt. You saw cash leaving your wallet and knew from the balance in your account that you needed to stop spending. Now plastic money leads people to spend blindly as they are often not aware they are overspending on credit cards and transactional accounts as you do not see the money as it leaves your account,” John Manyike, head of financial education at Old Mutual, says.

“Social media often misleads people into impulse spending as they are constantly faced with smart advertising. It is important to remember that a lot of what is projected on social media is not reality and in most cases those we admire simply show us snippets of their lifestyle and it is easy to believe that it is their everyday life. Don’t fall for this trap!”

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Buying what you want is just a click away

Manyike warns that plastic has replaced cash and buying what you want is just a click away that could be the beginning of financial trouble, especially if you are not disciplined. “Unfortunately, with that click, money trouble starts for many people. It is too easy to buy what you do not need with money you do not have. If you are not a disciplined spender, digital impulse buying could see personal debt quickly mounting and even becoming devastating.”

What many people do not think about when clicking that button is the role social media plays in influencing their buying behaviour. Manyike says going online and seeing the flashy lifestyles of others and accessible goodies can trigger the desire to keep up with the neighbours and have people buy items they cannot afford.

“It is sad that the first lesson of money management, namely understanding the difference between what you need and what you want, gets ignored when peer pressure and bling come to the fore. The hype and peer pressure create FOMO, the fear of missing out, as well as a sense of urgency and that ‘must have’ feeling can result in financial strain.”

He also warns consumers about “buy now, pay later” schemes and online gambling that completes the picture of social media temptation. “However, the greatest defence against digital or any excess spending is financial awareness. There is no substitute for getting financially educated and building a happy life based on simple money management principles.”

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How to resist spending too much

When it comes to resisting those digital calls to spend, Manyike suggests that you:

• Realise that social media is just a giant billboard. Colourful, enticing digital images are everywhere but their influence can be avoided if you scroll through sites only to find what you are seeking.
• Have a list of your “must-haves” and “nice to haves” nearby. This will show you immediately what counts and what can be bought later when the budget or wish list allows.
• Avoid logging on if you are in the mood for some retail therapy. The chances are that you will fall prey to impulse buying.
• Follow the 24-hour rule. If you see something you fancy online, take time out to think about your purchase. The chances are that if you were buying on impulse, the feeling will have worn off by the following day and you will no longer consider the item necessary.

“Although social media can influence financial behaviour, the ultimate responsibility for financial decisions lie with the user. Building your financial literacy, setting budgets and careful spending habits can help avoid the potential negative impact of social media on personal finances.”

Manyike says if a budget includes money set aside for discretionary spending, going online to buy something you want will be the pleasure it should be.