The high cost of keeping up appearances

In an era where social media, influencers, and targeted ads reign supreme, the pressure to maintain a picture-perfect lifestyle has arguably never been stronger. However, from the compulsion to overspend to the repercussions of hiding debt, the pursuit of keeping up with appearances can have a lasting impact on mental well-being, relationships, and long-term financial stability. But all it takes is a shift in mindset, to break free from the infinite comparison carousel and move toward financial and mental freedom.

The need for validation is deeply ingrained within human nature. As a result, humans subconsciously (and sometimes, consciously) look to those around them for confirmation of their social and economic status. In the past, this meant keeping one eye on what the neighbors had. But, in today's world, these signals come in the form of the material possessions and exotic lifestyles of our peers through reality TV, targeted ads, and social media.

In many ways, social media perpetuates this never-ending validation cycle. The more people post content of their seemingly picture-perfect lives in the hopes of feeling validated, the more this can create a sense of “missing out” in their peers, who in turn feel pressured to post similar content. Whether it's sharing photos of a lavish dinner, an exotic holiday, or a vibrant house party, for some, a key motivation to posting on social media, whether conscious or not, is to display certain signifiers of social or economic class. 

This is partly due to a phenomenon known as "conspicuous consumption," which involves purchasing goods or services to display wealth and social status. And it’s not just social media that’s fueling this behavior. Targeted marketing strategies often create a sense of scarcity to trigger impulsive purchases, using phrases like "almost sold out" or "limited-time offer." Email marketing, TV ads, and billboards further contribute to and normalize the impulse to overspend. 

Social media can greatly impact spending habits. According to a 2019 survey conducted by Schwab, over one-third of Americans have altered their spending based on their friends' social media posts. Moreover, survey respondents stated that social media platforms negatively influenced their spending choices. Combined with nearly half of Americans admitting that their emotions drive them to buy things they can’t afford, it’s easy to see how keeping up with appearances can prove an expensive endeavor.

Generally speaking, regardless of income, if an individual consistently spends beyond their means and prioritizes appearances over financial security, it will probably result in financial problems. Many may even take out loans or sign up for new credit cards to cover their snowballing costs, which quickly leads them into debt if left unchecked. 

However, the dangers of ignoring debt to maintain a facade of financial well-being are often overlooked, especially in the era of social media. These platforms only display a carefully curated selection of images that may mask an individual’s ballooning credit debt and lack of savings. As a result, it’s sadly often those trapped in a cycle of living beyond their means that end up decreasing their chances of ever attaining the lifestyle they portray themselves as having. 

The pursuit of keeping up with others often has no endpoint; it’s a game that’s impossible to win. Most social media platforms allow users to scroll and compare themselves to their peers infinitely. This has seriously affected mental well-being, with many individuals experiencing cycles of depression, financial worry, strained relationships, and an unyielding sense of inadequacy.

But it’s not just the stress of endlessly chasing the next fad or being seen at the latest hotspot that can be mentally exhausting. The fear of being exposed for living beyond one's means can breed deep anxiety and shame. In addition, persistent frustration and anger from never feeling "enough" can be incredibly isolating and drives some to seek solace or escape through substance abuse.

In addition, individuals with debt outside of a mortgage are three times more likely to suffer from depression and anxiety. The more debt accumulates, the easier it becomes to succumb to a sense of hopelessness. It can feel like an impossible burden, leading to the belief that it will never be paid off. Moreover, shame plays a significant role in perpetuating this cycle of debt. It can encourage individuals to hide the reality of their financial situation from themselves and others, preventing them from seeking the support they often desperately need. 

Breaking free from the vicious cycle of keeping up with financial appearances requires proactive steps and a shift in mindset. By embracing a perspective that values financial security, mindful spending, and the pursuit of financial freedom, it’s possible to regain financial control, reduce anxiety, and experience greater peace of mind and well-being. Here’s how to do it.

By triggering feelings of inadequacy and the consequent need to overspend, individuals especially vulnerable to social media's negative effects may want to consider cutting down on their usage. This can mean monitoring the amount of time spent on particular platforms, limiting scrolling time, and unfollowing individuals that provoke feelings of inadequacy. By creating some distance from social media noise, it becomes easier to focus on personal well-being, financial goals, and reassess priorities.

Creating a budget can be key to creating better financial habits and achieving financial stability. By understanding how much money is available at the end of each month, contributing towards specific saving’s goals becomes much easier. The first step on this journey is to compare income against expenses and to categorize all expenses into two categories: fixed and variable costs. 

• Fixed costs (i.e., essential costs such as rent and insurance costs) 
• Variable costs (i.e., non-essential costs such as streaming subscriptions, or impulsive online purchases)

By tracking at least three months of bank account activity, clear spending patterns should emerge, making it easier to identify areas in variable costs where it makes sense to start cutting back. From here, it’s possible to get a sense of how much cash should be left over each month, which can be contributed toward getting out of debt or saving for those things you truly want. 

Sometimes, overspending for a significant amount of time can result in the accumulation of debt. While getting out of it can be challenging, it is far from impossible. Two popular approaches to becoming debt-free are the debt snowball and debt avalanche methods. The debt snowball method encourages you to pay off the smallest debts first before moving on to larger ones. This approach provides a sense of accomplishment as the smaller debts are eliminated, which many find motivating. Alternatively, the debt avalanche method focuses on tackling debts with the highest interest rates first, which can help you save more money in the long run. 

Whichever method you choose, it's important to make consistent payments, reduce unnecessary expenses, and explore additional sources of income. Sticking to a well-executed debt repayment plan will make it possible to gradually eliminate all debts and pave the way to a brighter financial future.

With impulse buys and overspending in check, you’ll be able to start saving towards specific saving’s goals. Be it an emergency fund, a vacation, a sofa, or some exciting new toys for a pet. Spending money shouldn’t be viewed as an inherently negative thing. Plus, working towards financial targets that are aligned with one’s goals and aspirations can also be a great motivator for creating and sustaining lifelong healthy financial habits.

N26 gives you tools to help you gain control of your finances and create healthy money habits. With intuitive Spaces sub-accounts, allocating funds for specific goals not only makes it easier to reach your targets, it also helps reduce the likelihood of overspending as you work towards your goals. Additionally, Insights helps you to understand your finances, track your spending, and create budgets, making it even easier to stay on track. Achieve your goals and build a more secure future today with an N26 account.