YOLO and FOMO: Gen Z’s and Millennials’ Financial Decision-Making

Both “YOLO” (you only live once) and “FOMO” (fear of missing out) mentalities tend to be prevalent among Gen Z and Millennials. These generations came of age during the Internet era, and many find themselves comparing their own blooper reels to others’ highlights.

While YOLO and FOMO could spur you to live life to the fullest, these philosophies don’t always have a good influence on your finances. Prioritizing short-term gratification over long-term stability may leave you playing catch-up with more financially responsible and conservative investing peers. This is, ironically, just what YOLO and FOMO intend to avoid.

Here is an explanation of how YOLO and FOMO mentalities might influence financial decisions and some tips on managing the potential negative impact of these philosophies while still making the most of every day.

YOLO Mentality: Spending Yourself Into Debt

Overspending, lack of planning, and debt accumulation are three potential risks you face with a YOLO mentality. You may spend beyond your means on experiences or purchases that give you instant gratification without considering the long-term consequences.

Focusing only on the present might cause you to neglect important financial goals. You may not have much money put aside in emergency savings or held in a retirement account, which could mean borrowing money when you run into an unexpected expense. Once you get on the merry-go-round of paying high-interest debt, especially for ordinary expenses, it could be tough to get off and regain control over your long-term financial goals.

FOMO Mentality: Impulsive and Emotional Decision Making

Fear of missing out on investment opportunities may drive you to make hasty investment decisions without research. You don’t want to be left behind while all your friends become the next generation of crypto billionaires, but jumping into an investment without considering it is almost like gambling. And, like gambling, a poorly researched investment is unlikely to make you rich.

Succumbing to FOMO may also lead to overly emotional decision-making. Two of the most common harmful examples of emotional decisions are panic selling during market downturns and buying into hype-driven assets at inflated prices.

Managing Your Finances From YOLO and FOMO Impact

Here are some tips you may consider to help avoid the negative results potentially caused by YOLO and FOMO sentiments.

Manage Impulse Purchases

Practice delayed gratification by waiting before you make any non-essential purchases. This gives you time to decide whether the purchase aligns with your financial priorities and whether it’s truly worth the cost. You may find that you quickly forget you even wanted to make a purchase that you almost got pulled into making by impulse.

Educate Yourself

Take the time to educate yourself about personal finance, investing principles, and basic economic concepts. No person is usually more interested or invested in your finances than you are, so it’s important to understand financial fundamentals to make the most informed decisions possible.

By adopting a proactive approach to managing your finances, Gen Z and Millennials may reap the positive benefits of YOLO and FOMO mentalities without creating an unwanted financial burden.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Investing involves risks including possible loss of principal.

This article was prepared by WriterAccess.

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