Under the Influence: How Technology Impacts Our Spending

What shapes your spending habits? Maybe it’s rewarding yourself with online shopping after a stressful day, wanting the same shiny things that you see on social media, or falling for advertisements (that seem to know you better than you know yourself). However you look at it, technology drives how we spend and manage money. Are you aware of how you’re influenced?

Influence Marketing

The advent of social media influencers has equipped advertisers with a new avenue to reach consumers. Brands give free products to high-profile digital “celebrities” who have a strong connection with a large number of followers. On your own feed, you’ve likely seen an influencer post (or rather promote or endorse) the product that aligns with their own lifestyle brand and your interests.

Now, Facebook’s Brand Collabs Manager has empowered even more impactful influence marketing. This search engine connects marketers to influencers who align with their brand messaging. Influencers embed ads into content, which exposes the product to their audience. The collaboration is a win-win. Brands get to indirectly engage with their targeted audience, while influencers profit.

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Savings Tip: If you can’t resist the temptation to buy the latest and greatest featured by your favorite social media accounts, then hit unfollow. Say goodbye to the mentality that buying these pair of sunglasses will give you that luxurious lifestyle.

Targeted Advertising

It’s as if brands are spying on you. You’ve probably experienced shopping online for sneakers, for instance, and then sneaker ads pop up, following you all over the Internet. It’s called targeted advertising, but feels more like digital stalking you can’t escape. As tracking technology becomes more sophisticated, brands can access consumer data to personalize their advertising based on a customer’s online behavior and purchasing habits. Targeted ads proactively create a need you didn’t even realize you had, and sometimes it seems as if the advertiser has read your mind.

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Savings Tip: Brian X Chen, the consumer technology writer for The New York Times, recommends periodically clearing your cookies, resetting your advertising ID, deleting data on myactivity.google.com and hiding the ad.

Word-of-Mouth Reviews

Social media and review sites serve as a platform for consumers to voice their feedback about a product or service. Since the feedback is the personal opinions of peers and influencers, it’s seemingly trustworthy. Social media like Facebook, Pinterest and YouTube, along with online forums like Google Reviews and Yelp, give space for potential customers to ask questions and for previous customers to share their experience. This type of commentary gives you confidence in buying a product and becoming loyal to a brand.

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Buying Tip: Do the research. Is this online clothing boutique legit? How does this car part compare to a competitor’s? Real customers you know and trust are your best resource for finding a great deal on a quality product.

The Downside of Convenience

It’s easier now than ever to purchase something with a scroll and a click. Do a quick search on Amazon, add to cart and get one-day delivery. Click Shop Now on an Instagram sponsored ad and you’re instantly taken to the product page. It’s convenient, but risky for impulse buyers. Shopping online gives you a high, and it’s even more exciting for the package to arrive — like when you’ve signed up for a subscription service.

Subscription services market themselves as a way to save money. Pay a flat monthly fee to get a bundle of products every month that would typically cost you more money and time to buy individually. Over time though, do you really need more beauty products? Are you buying more clothes than you’d like because you can’t turn down a box full of new trendy clothes? It’s like repeatedly getting a gift sent to you! Also since payment is automatic, you can lose track of how much money you’re spending.

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Savings Tip: Remove your credit card from your favorite retail sites and log out of your account. Download the add-on StayFocused to limit the amount of time you’d spend “window shopping” on a site. Can’t quit your subscriptions? To get the same experience, Money Crashers suggests creating a “mad money” category in your budget to treat yourself every month.

Online Banking and Budgeting Apps

Monthly paper bank statements and bills is a thing of the past. Mobile capabilities have made it easy to check pending transactions and balances, transfer money and pay bills anytime, anywhere. With instant accessibility, you can track and monitor your finances in real-time. As the counterpart to online banking, the emergence of budgeting apps also enhanced the money management experience.

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Money Management Tip: Prioritize essentials, goals and wants. The purpose of your budget is to allocate money toward your needs, help you reach your goals and set money aside for you to enjoy life — all in an order of importance.

Inarguably, technology has tremendously influenced our financial decisions and behaviors. Arguably, the impact is positive, negative or both. What matters is awareness. Understanding the hidden agenda of a sponsored social media post, or the addictive nature of online shopping, is the first step to becoming a smarter spender.

The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.