People nowadays seem to be constantly coming up with reasons to live for today without really thinking about tomorrow. There’s a certain fear that seems to resonate with these types of people.
There’s actually an acronym that has become associated with this type of behavior – FOMO. The question many people ask is “What does FOMO mean?”
What Does FOMO Mean?
FOMO is simply an acronym for “Fear Of Missing Out.” It’s basically the reason many people “live for today.” It’s also the reason many people don’t think ahead about the long-term implications of their decisions that they make today.
An example of this can be something along the lines of a teenager (let’s call them “Jane”) buying a brand-new car because another friend (Billy) has one. Since a friend (Billy) has a new car, the thought is that the teenager without a brand-new car (Jane) may be missing out by not having a new car.
There may be certain experiences that the teenager without the brand-new car (Jane) may be missing out on. It could be anything from simply having a car or having the newest car on the block to having a car to tell your friends about.
Acting on this fear doesn’t take into account that teenager #1 may not be able to make the car payments since they’re only making minimum wage. It doesn’t really take anything into account other than simply impulse.
Please note that I’m not a psychologist or anything, but there seems to be quite a bit of anecdotal evidence.
How Does FOMO Apply?
FOMO can seriously inhibit your progress in the future. In the example above, Jane is probably negatively affecting her future prospects due to her decision for today.
Given the scenario, if Jane is making minimum wage, having that brand-new car is going to cost quite a bit of money to maintain. Thus, that means having to work many hours just to keep up with the car payments.
On top of that, the car payments may have to be made for years. Also, all of the money that she’s putting toward the car is basically going into a depreciating piece of property. Thus, it’s losing value over time as opposed to increasing in value.
The unfortunate thing is that living with and acting on FOMO can cost you dearly.
You Should Get Over Your FOMO
There are quite a few benefits to getting over your fear of missing out. Getting over it can save you quite a bit of a hassle financially and ultimately, many headaches and heartaches.
If you’re worried about missing out on experiences, etc. now, by not delaying your gratification, you’ll end up jeopardizing your future experiences.
Then, when there’s something you want to do for you because it’s something you always wanted to do, you’ll end up jeopardizing those future experiences due to having done something somebody else did (in the heat of the moment).
Let’s take the example with Jane above:
- Jane is getting a brand new car, let’s estimate that it’s $20,000.
- Let’s also estimate that Jane gets a 3% interest rate for 60 months.
- The estimated payment is about $360 (plus insurance, etc.).
Jane now has to worry about a $360 payment for the next 5 years. At age 17, she’ll be 22 when she actually owns the car free and clear. Total amount she will have paid is about $21,562 (~$1,562 in interest).
She’ll also have a car that may not be in tip top shape anymore and is depreciating in value.
Next part of it is the investment side (opposite of buying a brand-new car):
- Let’s say Jane doesn’t buy a brand-new car, but decides to use her parent’s car whenever she can and car pool the rest of the time.
- Now, if Jane puts that same $360 per month into something like the S&P 500, she can probably make around 5% give or take (along with dividends).
- After 5 years, she may have something along the lines of $24,512 (~$2,912 in gains / dividends)
The difference is a more than $4,000 difference between the car and the investment. Plus, if Jane decides never to touch the investment again, she can leave it and it will continue to accumulate dividends, etc.
If she does leave those funds in the S&P 500 until the age of 60 and doesn’t touch them and doesn’t add anything else to them…
Jane will end up with about $156,520. Not bad!
This is just one example of why it can pay off to get over your FOMO. There are many scenarios that will mirror the above example.
Keeping Up With The Joneses
The term “keeping up with the Joneses” is basically a synonym for FOMO. It’s continuing to get the newest or latest “cool thing” that everybody else has.
Your fear of missing out can lead you to doing more than just buying a brand-new car as in the example above. It can be the little things that can add up too. It also includes having to get the latest iPhone or Android phone or things along those lines.
It can also be acting the way others are acting. Acting like certain things don’t matter when they really do or simply trying to fit in.
In the long run, on many things it’s best to sacrifice today’s pleasure for long-term benefits.
There’s actually a movie called “The Joneses” that is a play on this concept. I wrote the review because I think there’s value in watching the movie. Watching it will hopefully get viewers to take a look at their own habits, it can be quite beneficial.
Once You Know What FOMO Is, It’s Probably Best To Get Over It
Acting on your fear of missing out can cost you in huge ways. It can cost you a lot of money in certain short-term decisions you make or in some of the habits you may have.
FOMO can also cost you when you’re trying to just fit in or keep up with “The Joneses“. These decisions can ultimately lead to missing out on more in your future.
Thus, your best bet is to be yourself and delay pleasure and gratification for immediate term experiences in order to plan for higher priority goals or experiences in the long.
Trust me though, I know it’s easier said than done!
Do you have any thoughts on FOMO? Leave us a note below.
