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4 Sneaky Ways Social Media Can Wreck Your Finances

By Justin Boyle - Mar 20, 2014 at 1:52PM

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Your Facebook account might be bad for your bank account. Check out these four ways that social media can lead to bad personal finance habits and a harder time managing your money.

Social media is everywhere, isn't it? You've probably checked the feed on at least one of your social media accounts already today, particularly if you're one of the roughly 730 million daily active users of Facebook.

Just like most ordinary parts of life, though, there are a few ways that social media can get you into financial trouble if you're not careful. Even if you're a responsible sort of person who takes advantage of free credit score monitoring and tends to use credit cards sparingly, these hidden dangers of social networking might sneak up on you.

Hidden Danger #1: Social comparison bias
Social network users get to pick and choose the parts of their life they put on display for family, friends and members of the general public. Not surprisingly, most people choose to share mainly good news -- stories of promotions or compliments at work, details of a lavish birthday surprise, photos of new toys, exotic vacations or sunny days at home when the kids have been no trouble. Good for them, right?

Why it's dangerous: Studies have shown that people tend to base how they think they're doing on how well they seem to compare to other people, and reading a wall full of glittering updates from hundreds of acquaintances can make the details of your everyday life seem downright humdrum. Researchers at Cornell University discovered in a 2011 study that that when your self-esteem suffers, you're more likely to whip out your trusty credit card and buy something expensive to help you feel better.

Hidden Danger #2: Lost productivity and trouble at work
Practically every office workstation includes a computer that's networked to the Internet. That connectivity means you can plug into social media whenever work is unexciting, which -- let's face it -- is most of the time. Before you know it, an hour or two have gone by and you've gotten nothing done. Social media can be even more distracting from the job hunt than it is from tasks on the job, too, if you're unemployed.

Why it's dangerous: For one thing, you'll spend less time on work, which can become a problem if your overall productivity starts to suffer. What's more, be aware that not only can potential employers pull your credit report, but nearly half of all companies surveyed in 2013 by London's Institute for Employment Studies report that applicants' social media use factored into their hiring decisions.

Hidden Danger #3: Personal information in the wrong hands
Although the major social networks have worked to improve their account safety measures in the last couple of years, it's still not altogether uncommon that passwords get swiped and accounts get hijacked. If you're a heavy user of social media, or if you've ever posted actively on a personal blog, you've probably got all sorts of private information strewn throughout your various accounts.

Why it's dangerous: You might be surprised just how easy it can be to spoof a digital identity. With just a few pieces of personal information, a would-be thief can follow a patchy trail from your Facebook account straight to your bank account. Not only that, but heavy users of social media may be inclined to miss the telltale signs of digital confidence tricks that pretend to be official communications from their social networks of choice.

Hidden Danger #4: Addicts make bad choices
In a 2012 University of Chicago study, a balanced sample of participants reported stronger and more frequent "desire episodes" for social media than for alcohol, tobacco, sex or sleep. These episodes led often to "self-control failure" -- subjects succumbing to their desires during a period of unrelated responsibility. After the results of the study were released, clinics in the UK began admitting and treating people for social media addiction.

Why it's dangerous: The depressive effects of social comparison can be greater if your activity on social networking sites is the product of a compulsion rather than as a conscious choice, not to mention that your social browsing on company time is more likely to be a problem and you may be less cautious with sensitive personal information. Addicts tend to act without conscious agency, increasing their risk of falling victim to the dangers of their vice.

How to stay out of harm's way
Fortunately, the hidden financial dangers of social media are far from unavoidable. Just keep in mind that these pitfalls are mainly a problem for people who are unaware of them, so you're halfway to avoiding them just by knowing that they're there.

Also, try to check your free credit score anywhere close to as often as you check your timeline feed. Keeping fiscal fitness at the forefront of your mind can help you make better decisions with money, even in the face of social pressure.

The original article: 4 Sneaky Ways Social Media Can Wreck Your Finances appeared on WisePiggy.

Additional personal finance articles can be found on WisePiggy.com

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