It’s no state secret that money can be used in highly positive and negative ways.
But who knew that appealing to personal vanity would appeal to a large swatch of over-spending Americans?
That’s the takeaway from a new Lending Tree study. The study shows approximately 40% of U.S. adults have overspent on goods and services to leave a good impression on other people.
Keeping Up With the Joneses
Social scientists call the urge to impress by flinging cash around “Keeping Up With the Joneses.”
The Lending Tree report reinforces that notion, even if it means vanity-driven over-spenders may suffer significant financial damage in the process.
The study revealed the following:
· 39% of Americans have overspent to impress others. This is especially common among the younger generations — Generation Z'ers ages 18 to 25 (52%) and millennials ages 26 to 41 (46%).
· The top reasons Americans overspent to impress others? They wanted to feel successful (35%), wanted to impress family or friends (30%), and wanted to impress a date (29%).
· Overspending on clothes and shoes, overspending on gifts, and treating others to fancy dinners they can’t afford are the top ways Americans overspend to impress others.
· 27% of those who overspent to impress others are currently in debt. An additional 36% previously had related debt. By generation, Gen Xers are most likely to currently be in debt for this reason (34% of whom overspent).
· 77% regret overspending. To make matters worse, more than a third aren’t in contact with at least one person they previously tried to impress.
“There’s no question that the things we can buy can make us feel better about ourselves,” said Matt Schulz, chief credit analyst at Lending Tree. “That tailored suit, that shiny new car, those designer heels, those first-class tickets — they can bring an adrenaline rush that’s palpable and exhilarating.”
“The problem is that those feelings usually fade fairly quickly, and people are often left with depreciating assets and debt in their wake,” Schulz added.
Fear and Loathing When Overspending
Why do so many Americans indulge their vanity and spend too much in order to impress others?
It turns out that old-fashioned herd mentality and new-age digital lifestyles are big contributors.
“The top reason Americans overspend to impress others comes from herd behavior,” said Bill Ryze, a chartered financial consultant at Tennessee-based Fiona. “A rational thought will recognize the risk of spending money you don’t have, but the instinct to keep up with what your friends are spending, or to meet the “image” others have of you for fear of being left behind is a common reason Americans spend to impress.”
Social media also plays a key role in excessive spending habits, especially with the younger generation.
“Most people are faking it on social media and people the Gen Z generation look up to are projecting an unrealistic lifestyle,” Ryze said. “Youngsters then attempt to live in the same footsteps, spending money they don’t have and unnecessarily sinking in debt.”
The need for attracting attention also fuels overspending, which in turn keeps the “big spender” image rolling, causing even more damage.
“Some people can get caught up in social comparison as a need to impress parents, friends, relatives, kids, colleagues -- and one way for them to express "success" is by overspending,” said Michael Liersch, head of advice and planning for Wells Fargo at Wells Fargo Wealth & Investment Management. “
One of the primary reasons people do so is tied to ego, so others will want to be around them.
“The idea is that if you project a particular image, it will attract the kind of attention from the people they desire to be affiliated with,” Liersch said. “For example, successful people attract successful people. This behavior is also common in sibling rivalry, where there's competitiveness and people want to appear to "win."
“Unfortunately, this behavior can perpetually feed on itself so this charade is hard to keep up, both emotionally and financially,” he noted.
To aid in shining a light on the problem, Liersch lists some red flags to indicate there’s a personal problem with indulgent overspending to impress.
-- If you don't feel that this overspending is not sustainable, it probably isn't.
-- You get into "Rob Peter to Pay Paul" mode and pull from one resource to pay for another and so on.
-- Your credit card is declined or you're declined a credit line.
-- You're continually nervous about being unable to pay your central expenses.
-- You're making excuses for your debt and are regularly late paying bills/receiving late notices.
-- You let your gas tank go to E/empty every time before refilling it.
-- You get stressed out about giving gifts/holidays because you can't afford it.
-- Family or friends will have an intervention of sorts to encourage you to face your issues.
It's important to note that if you have some of these red flags, it doesn't make you a bad person.
“You just need to consider some severe changes over time,” Liersch said. “Chances are, putting on this facade is exhausting, and there will come a point that you've had it, anyway.”
