The Social Impact on Financial Wellness
As technology becomes more deeply intertwined with our social interactions, a lot of people turn to social media platforms when it comes to making critical decisions in various matters of their lives, including finances. At the root of it, social media platforms play a big role in often amplifying and emphasizing affluence, while under-representing poverty. This creates an unrealistic expectation, leaving many people feeling that they’re not where they “should be” financially, which can lead to obsessive behaviors like “keeping up with the Joneses.”
No matter which way you look at it, it seems that social pressure can perpetuate negative financial behavior. And what’s more is that this social pressure affects all generations: “88% of millennials, 71% of Gen Xers, and 54% of boomers believe social media creates more of a tendency to compare one’s wealth or lifestyle to others.” 1 The more people become enthralled with keeping up a certain image, the more likely they are to lose sight of maintaining a grip on their finances. People “have become so indoctrinated with the idea that having money is important, that they no longer question why. They are unaware that perhaps what they are truly seeking is an increase in self-respect, or security, or freedom, or love, or power.” 2 And although social media impacts every generation, perhaps the most impacted are millennials. It turns out that “57% of millennials spent money they hadn’t planned to because of what they saw on their social media feeds. ” 1
But when it comes to influencing people’s behaviors, technology can create a lot of good. Today, people have access to more financial tools and literacy programs than ever before. This wealth of access to information and tools gives people the ability to be more proactive when it comes to their financial lives. In one study, “personal financial management users who learn they overspend compared to peers cut their monthly spending by $600/month on average.” 3
With the use of technology, people are more empowered than ever before. Technology makes it easier to automate important behaviors such as paying bills, saving, and investing, which can ultimately improve outcomes. “In one workplace pension program, changing from opt-in to automatic enrollment resulted in increased participation of 37%.” 4 Now people don’t have to fundamentally change who they are in order to lead more successful financial lives. Automated tools can help people manage money proactively and make important decisions without having to be bogged down by the details. And it seems that millennials are quick to catch on. A recent report found that “70% of millennials use online apps or tools to help them manage their money, and 40% of millennials have a financial professional and work closely with them, compared to 25% of Gen Xers. 1
With the acceleration in technological innovation, financial institutions are now well positioned to help their customers build better financial habits without having to fundamentally change their behavior. Technology can simplify the way people interact with their finances by breaking down complex and overwhelming transactional information into proactive notifications and financial guidance.
To help financial institutions give their customers the tools they need to become financially savvy, we’ve created MoneyMap with Pulse—a completely self-guided financial wellness tool that empowers customers to take control of their finances. Now people can take advantage of AI-driven insights and personalized advice to make better financial decisions in real-time, building better financial habits without any of the heavy lifting.