YOLO and FOMO: how your mindset affects your money
The world has become a lot smaller in the last year, and while YOLO and FOMO used to be about the latest restaurant openings, sunny beach holidays, or relaxing spa weekends, they’re now the newest cook-at-home meal boxes, banana bread challenges, and the next jigsaw puzzle to get through
YOLO, in case you don’t know, stands for “You Only Live Once”, while FOMO is an acronym for “Fear of Missing Out”. Think of it as a mindset – a way to rationalise your spending – especially impulse purchases caused by a desire to ‘Keep up with the Joneses”.
Covid is not helping
The coronavirus pandemic has changed our lives in many ways, including the way in which we are influenced to part with our cash.
Today, all you need to do is spot a celebrity promoting a new beauty trend on Instagram or search for a new craft to keep you entertained at home, and you’re immediately bombarded with adverts for everything from knitting needles and embroidery kits to at-home mani-pedi kits.
After the fifth time of seeing one advert, on all your social media channels as well as every web page you look at, you can then buy it with a few flicks of the finger then eagerly await its delivery - and let’s be honest there’s not much else to look forward to right now and YOLO once, right?
While it’s clear why these acronyms make us act the way that we do, when it comes to the more mundane realities of our everyday lives, they don’t really fit in with saving for the future - whether it’s funnelling money into your holiday fund for when the world reopens, filling up a freedom fund should things in your life blow up or even ploughing money into your pension.
We don’t need to look far for examples of how YOLO and FOMO can affect our spending.
The rise of Buy Now Pay Later (BNPL) agreements is just one, with five million people using one to pay for online shopping since the start of the pandemic.
The BNPL business is now turning over £2.7bn a year and despite recent news that it will be brought under the regulation of the Financial Conduct Authority (FCA), research by the watchdog shows that more than one in 10 customers using BNPL schemes are in arrears with their repayments.
We can’t forget the pandemic either (as if we would): nearly 40 per cent of working people have seen their household’s level of disposable income fall since the start of the pandemic.
Most seriously, many people have lost their jobs. The latest labour market data shows that unemployment is increasing and that the number of redundancies is at a record high.
The situation would have been much worse without the job retention scheme, which has helped to protect millions of jobs. At the peak of the first lockdown, 9 million people were furloughed, and 4 million people remain furloughed as of 31 December 2020.
While the job retention scheme has protected employment income, it has, however, required many workers to survive on just 80 per cent of their normal wages.
ONS survey data from October 2020 shows that around 4-in-10 furloughed employees in the private sector didn’t receive a top up to their wages.
But there are plenty of small ways you can keep your money in control without missing out. Here are some quick tips to get you started.
Track your spending
There are hundreds of different ways to track your spending.
Long gone are the days when you would have to record your spending with a pen and paper, today you can download a multitude of apps which will do this automatically.
It’s a great way to learn where your money is going and will reveal if you are paying the price for having a bad case of FOMO.
If you have more going out than you do coming in, this is a great time to rebalance your spending.
Some budgeting apps will let you set short- and long-term goals, be it for a new car, your next holiday, a wedding, or even your next home.
However, before you set any goal, ask yourself what’s inspired it. If you discover it is due to keeping up with others, ask yourself if it is worth it and is avoiding FOMO really an important priority.
Having between three and six months of your regular salary saved can provide a buffer if your income drops
Topping up your savings when you can
Putting away a small amount on a regular basis is key to avoiding falling into debt and to provide some peace of mind about the future.
Having between three and six months of your regular salary saved can provide a buffer if your income drops, and it’s enough to pay out for emergencies.
For longer-term savings for retirement, a pension is worth considering and with automatic enrolment your employer will pay into it too.
And when it comes to retirement, having enough cash saved into your pension means that you can avoid FOMO in your old age.
Check your entitlement
From mortgage holidays and credit card interest-breaks related to the coronavirus pandemic, to income support and help with housing costs through benefits including Universal Credit, there’s a lot of help available.
It’s well worth checking what you’re entitled to and what you could be claiming help for. Turn2Us has a helpful benefit checker to get you started.
Make your money work harder
Whether it’s moving your money into an account that pays more interest, transferring expensive debt somewhere cheaper, selling your old clutter and pre-loved items, or earning money from a side hustle, there’s plenty of ways you can top up your income without having to do much, or even leave the house – which is handy at the moment.
If you can avoid trying to keep up with the Joneses, then at least you are generating some extra cash to cover the extra costs of having a YOLO attitude.
3 things to do right now...
Have a social media cull. Unfollow any accounts that have been causing you to feel like you are missing out. What you don’t see, can’t bother you.
Have a think about where your FOMO is coming from. If you know what’s driving it then it's easier to tackle it.
Think about looking after your future YOLO. The you of next year doesn’t want to be saddled with any debt from the YOLO of today. Look after your future self!
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Don’t forget that while you may think that this article is brilliant, it is intended for information purposes only and should not be mistaken for financial advice or recommendations.
