Chances are that you’ve heard of FOMO – the “fear of missing out.”
Many of us experience this fear in our lives. We worry that we are missing out on something fun, or we think that an opportunity will pass us by. But is FOMO actually costing you a lot more money than you thought?
For a long time, I had a serious case of FOMO and it was somewhat detrimental. Here are some of the ways that FOMO might be costing you:
Spending Money on Sales
One of the biggest cost people incur is spending money on sale items, as there is always a sense of urgency with most sales. If you don’t hurry and buy, you might miss out on a really great deal. What if that deal never appears again?
In many cases, FOMO encourages you to spend money you aren’t planning to spend. The reality, though, is most sales are cyclical. Certain items go on sale regularly, so you will have the chance to buy something again at a low price.
Also, just because something is offered at an attractive price doesn’t mean you actually need to buy it. In some cases, the purchase might not make sense for your situation. Just because something is on sale doesn’t mean you need it. If you’re just afraid you will miss out on something, and you buy it to avoid missing out, that’s money that could be going elsewhere. Too many FOMO purchases, and you could find your budget spiraling out of control.
Going Out with Others
Going Out with OthersMy FOMO issues were more about the feeling that I’d miss out on fun. I wanted to be at every family event, take every vacation, and be at every weekend gathering of friends. I didn’t want to miss out on a good time, or a chance to see people I like.
However, over time I realized that I was spending money I didn’t have. So what if three of my friends were going on a spring break trip? Did I really need to put another trip on a credit card just to be a part of the fun?
While I love to travel and take the opportunity to travel when I can, it’s usually the result of planning. Many of the choices I made back in college cost me quite a lot of money, whether it was going out to an expensive dinner every weekend, joining family activities even though it required a lot of travel, or participating in trips. My FOMO resulted in credit card bills and over-extension because I didn’t want to miss out.
Today, while I sometimes wish I could participate in all the activities and do all the travel, I understand that I’m not truly missing out. I have a lot of great opportunities and I get to spend time with my loved ones. There’s really no need to spend a lot of money to make it happen and have a good time.
Losing Money Over and Over in the Stock Market
I have a friend who keeps asking for stock advice whenever the market is on fire because he’s missed out before the runup and now he’s bought at the top and have lost money. There are plenty of studies that show that investors lose out on one-fifth to one-third of all gains the overall market’s enjoyed because they bail when the market turns sour, fearing that they’ll miss out on keeping what’s left of their portfolio. And when the market inevitably comes back and is roaring, they have a case of FOMO and then buy back even though all the gains already happened as everyone seems to be making money hand over fist.
Time in the market, not timing the market is what makes you money. If you always let FOMO dictate when you invest, then you are for sure going to keep losing.
Next time you find yourself worried about what you’ll miss, stop and think about what you already have. You might be surprised to discover that you aren’t missing out at all, or that you are exaggerating how much you are actually missing out. You might even be able to transform your financial life in the process.