Half of young adults in Canada have gone into debt to keep up with friends

Young group of clubgoers drinking and catching up together while dancing at a trendy open air nightclub.Image: Young group of clubgoers drinking and catching up together while dancing at a trendy open air nightclub.

In a Nutshell

A Credit Karma survey found half (50%) of young adults in Canada have gone into debt to keep up with their friends, with a third of respondents saying they've racked up more than $500 in FOMO debt.
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Many young Canadians are overspending to keep up with their friends.

A new Credit Karma/Qualtrics survey of 1,050 Canadians aged 18 to 38 shows half of young adults have spent money they didn’t have and gone into debt in order to keep up with their peers.

And some young Canadians may be falling into habits that perpetuate a cycle of overspending. More than a third (35%) of respondents said they don’t feel comfortable telling their friends “no” when friends suggest an activity they can’t afford. And 63% of those who have overspent to keep up have kept their debt a secret from friends. (Learn about our methodology.)

But it doesn’t have to be this way. We’ll give some tips below to help you curb the fear of missing out, or FOMO. But first, let’s take a closer look at why many young Canadians are overspending.

Key survey findings

Half (50%) of respondents spent money they didn’t have to keep up with their friends.
63% of those who went into debt to keep up typically keep the debt a secret from friends.
35% of respondents don’t feel comfortable saying “no” when one of their friends suggests an activity they can’t afford.
A full third (33%) of young Canadians who have gone into FOMO debt went more than $500 into debt. More than two-thirds (68%) went more than $100 into debt.
The top situations causing FOMO were vacations (45%), weekend trips (42%) and weekend or after-work dinner or drinks (36%).

What do young Canadians overspend on because they’re afraid of missing out?

We’ve already dug into FOMO-fueled spending among young adults living in the U.S. A previous Credit Karma survey found that 39% of U.S. millennials have gone into debt to avoid FOMO and participate in activities with friends, which typically involve spending on things like food and drinks on nights out.

Similarly, in Canada, we found that experiences with friends — and their associated costs — are a big driver of overspending. According to our survey, just over half (56%) of young adults in Canada who went into debt to hang out with friends did so to buy food, while 41% did so to buy two-fours and other booze.

When it comes to planned events, nearly a third (31%) of respondents who overspent did so to travel with friends.

Still, not all FOMO spending is about trips or nights out with friends.

To keep up with friends, many young Canadians feel pressured to go into debt to buy stuff like clothes (32%), electronics (29%) and even cars (13%) or homes (11%). And 30% of respondents said they spend money on an item or experience at least a few times a year just so they can post about it on social media.

How much debt have young Canadians racked up because of FOMO?

There’s some good news: 83% of respondents have a weekly/monthly budget they try to stick to. And 14% say they never spend impulsively.

Unfortunately, more than a third (34%) of those surveyed feel pressured by friends or social situations to spend money at least once a month. Some young Canadians are even going into debt as a result.

How much debt? Here’s a breakdown:

In the past year, how much debt have you gone into to keep up with your friends? Percentage of respondents who have gone into FOMO debt
$100 or less 32%
$101 to $250 17%
$251 to $500 18%
More than $501 33%

 

As you can see, a little over two-thirds (68%) of those who’ve gone into debt to keep up with friends have gone more than $100 into debt in the last year.

That might seem a bit loonie. But a whole third (33%) have gone more than $500 in FOMO debt — enough for a couple of hundred double-doubles at Timmies.

Why do Canadians feel pressured to overspend?

By now, it should be pretty clear that many young Canadians experience a lot of FOMO that drives them to overspend. But why? Our research suggests it may all come down to social anxiety.

Of those who have gone into debt to keep up with friends:

  • Nearly half (49%) said they did it because they were afraid that not participating in something would leave them excluded in future events
  • An equal 49% said they didn’t want to miss something like a once-in-a-lifetime or novel experience
  • Almost half (45%) said they didn’t want to be perceived as an outsider
  • 34% didn’t want to lose friends
  • 29% were afraid of being judged

Tips to keep friendships strong and stay out of debt

Young adults in Canada clearly care about maintaining strong friendships and social lives — which is great — but it shouldn’t come at the cost of your financial stability.

Here are some suggestions to help avoid FOMO on a budget.

Be honest about your finances.

Our survey found that 69% of young adults in Canada think their friends make more money than they do. But in reality, far less (41%) actually know how much their friends make. You don’t have to have a big salary reveal with your friends, but being open about what you can and can’t afford might lead you you learn they’ve been feeling the same as you.

Suggest free or low-cost alternatives.

Sticking to a budget doesn’t mean you can’t have fun with friends. Consider things like a potluck, going for a hike in a park, or going over to someone’s house for a party instead of going out.

Plan how you pay.

Leave the credit cards at home to help avoid overspending. Consider keeping a separate savings account that you can use for short-term spending when you want to go out with friends. Consider taking cash or a card linked to that account when you go out, so you have a fixed amount you can spend.


Methodology

On behalf of Credit Karma, Qualtrics conducted a nationally representative online survey in February 2019 of 1,050 Canadians aged 18 to 38 to learn about their spending habits related to FOMO, or the fear of missing out.


About the author: Paris Ward is a content strategist at Credit Karma, providing readers with the latest news that will aid their financial progress. She has more than a decade of experience as a writer an… Read more.