FOMO Buying
Table of Contents :
Introduction.
Why FOMO Buying.
The Triggers.
Emotional Impact.
Strategies to Avoid FOMO Buying.
Influencing Markets
FOMO in Housing
Disclaimer.
Are you tired of feeling left out and missing out on exciting monetary opportunities?
Welcome to the world of FOMO buying, and lets explore more about it.
Introduction
We all get excited by offers, that can result in some sort of monetary rewards.
FOMO, Fear of missing out is one of these persuasive driving force.
It is also defined as a psychological urge, where people make impulsive buying decisions, as they fear of being missing out on a compelling monetary opportunity.
There are many factors behind this human behaviour, but clearly it leaves a profound effect, both on consumers and markets.
Latest example is Canadian Housing Market, where people went on a buying spree as there is no tomorrow, even by over looking basic economics, and thus over paying.
Hope you get the point.
Why FOMO Buying
FOMO buying is a psychological anxiety or desire, when we make unplanned purchases.
The fear of missing out on a hypothetical monetary benefit, or even left behind on a trend, explains it perfectly.
Just because somebody else has benefited, this social and economic pressure to want the same experience, often overshadows our economic thought process.
Therefore, understanding the why behind this psychological phenomena is very important, if you want to overcome this social pressure.
No doubt, such impulsive decisions do strain your finances at times.
The reason being, it leads to over spending, piling up more debt, and at the end making no financial sense.
The Triggers
There are many triggers behind FOMO Buying.
One that stands out is the perceived scarcity, as we think if not acted now, we will miss on opportunity of a lifetime.
Instant gratification might give a rush, when buying some thing trendy.
When your friends or relatives proudly display their purchases, surely puts a social pressure on some buyers.
To some, FOMO can increase stress level or even anxiety, if not managed properly.
Mind you, if you don't manage your desires, expectations and social pressures properly, often you might end up in the vicious cycle of FOMO buying, and then regretting it later on.
Emotional Impact
FOMO buying not only impacts you financially, it also leaves an emotional impact on your life, especially when times get tough economically.
No matter how you see it, our finances have direct emotional bearing on our lives.
If things donot pan out as expected, it is natural that our feeling from instant gratification to anxiety, gets affected.
Besides facing financial repercussions, people also face short or long term regrets, or even stress.
Under extreme circumstances, relationships between family or even friends could get strained.
Just keep in mind, excessive, unplanned or even impulsive buying could have far reaching consequences, which might be hard to reverse or recover from.
Strategies to Avoid FOMO Buying
There are many ways that can help you to avoid FOMO buying.
First, establish a budget and stick to it, which can be time or project based.
Second, set clear financial goals while avoiding impulsive decisions, and don’t forget to do your own due diligence.
Third, develop a clear distinction between wants and needs.
Fourth, focus on your long term goals, while keeping an eye on your financial capabilities.
Fifth, unplug from social media if that influences you too much, as everyone there looks too good to be true.
At the end, practice gratitude as that makes you feel contented, happy and thankful.
Influencing Markets
When people buy based on FOMO on stock market, often price volatility comes into play.
No doubt, such speculations lead to bubbles in asset prices, which looks very rewarding for first entrants.
But when they become too inflated, regulators come into picture, as they clamp hard on such activities.
Most buyers are usually late into FOMO cycle, hence get burnt financially.
Consequently, they stay away from markets for long, but instead they should be buying as markets are at the lowest.
And finally, they miss uptrend in market.
Remember golden rule of investing, be fearful when everybody is greedy, and be greedy when everybody is fearful.
FOMO in Housing
Speculation in Canadian housing market is a perfect example of FOMO buying.
We all see ads, where the narrative is buy now, because of XYZ reason.
Surely it can work for a select few.
For a common Joe, deciphering through the news alongside limited financial awareness, brings a perfect recipe for FOMO buying.
Rushed buying decisions without proper due diligence, often leads to financial stress.
Having unrealistic expectations, ignorance about downside, and being delusional about our own financial capabilities, end up in disaster that we see unfolding in Canadian real estate now.
I believe, downtrend in housing has just begun.
Disclaimer :
As a disclaimer, I’m not a financial advisor please consult one before investing based on your personal financial situation.