Looking at Lissette Calveiro’s Instagram feed in 2013, you’d assume she was living the high life.
While her social networks showed her going out for dinner every night and sporting a brand new outfit almost every day, in reality, her internship was unpaid, her savings were dwindling and the young publicist was racking up her credit card debt faster than she could pay it off. Before she knew it, she owed over US$10,000.
“Instagram was on the rise and a lot of time I would emulate the other bloggers I was seeing. I’d try to capture the same images, try to capture the same circumstances. So, that’s where it all began,” Calveiro said.
Living an Instagram-worthy life
In 2013, then 21-year-old Calveiro moved to New York City from her home in Miami for an internship in marketing.
Like many millennials, social media has always been part of her personal and professional life. As she saw other bloggers traipsing across the globe and showing off the newest styles, she said she began taking monthly, expensive vacations and increased her online shopping to keep up with her social network.
“I was spending like I was making a lot of money. … If you’re not making any money, and rent in the city is a thousand dollars and you’re having a meal every night with your friends, that’s $30. It all adds up.”
She’s not the only millennial that’s experienced this problem. According to a Manulife survey which came out in July, Canadian millennials struggle with debt largely because they’re trying to keep up an Instagram-worthy lifestyle.
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According to the report, 40 per cent of Canadians with debt admit that they live beyond their means, and 12 per cent of these respondents directly relate their debt levels to too many costly outings with friends and family.
Manulife Bank CEO Rick Lunny sees a direct link between indebted millennials and their social media use.
“Particularly among millennial-aged Canadians, I would say everybody lives a perfect life on Instagram,” Lunny said.
“Everyone looks at everyone else’s social feeds and sees their vacations and their celebrations and their concerts — and so they really have this fear of missing out. And it’s obviously contributing to their overall ability to manage their cash flows.”
In a survey conducted by Credit Karma a few months ago, half of Canadians admit to overspending to keep up with friends, and 30 per cent of these respondents admitted to spending money on an event at least once per year solely for the purpose of posting it on social media.
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The Manulife report states that nine per cent of respondents admit to being “clueless” about how much they’re spending every month.
This is the situation Claveiro, now 27, found herself in.
“I was never financially delinquent, but I wasn’t looking at my finances,” she said. While she was aware she was carrying balances on her credit cards, she didn’t realize how much she owed until she added up the debts on her several credit cards.
How did she climb out of debt?
When her internship ended in the fall of 2013, Claveiro moved back to Miami to be closer to her family. It wasn’t until she had an opportunity to move back to New York in 2016 that she finally realized that she collectively owed over US$10,000 in credit card debt.
“I thought, ‘Oh my God, this is way more than I thought.’ So that was my big breakout moment. And things did not change overnight from there,” she said.
Upon moving to New York, she found an apartment an hour-long commute away from Manhattan and began tracking her expenses in spreadsheets, which documented what she earned each month and what she spent as well as her net worth. Once she could afford it, she began working with an advisor to set financial goals for herself.
“New York was a place where I started to reshape my thinking. I thought, ‘What am I actually spending money on?’ When I started to look at it, it was a lot of travel, a lot of eating out, a lot of going to things with friends and a lot of shopping online — things that I really didn’t need to be doing at that age.”
It took her over two years after moving back to New York to pay off her debt completely. Part of that, she said, is because even though she cut back, she was still spending more than she needed to. While she travelled for work occasionally, she said she would often extend her trips by a whole week to maintain her Instagram presence, which she’s now grown to over 36,000 followers.
Brands also began reaching out to her seeking partnerships in 2016, at which point she had reached about 12,000 followers on Instagram, which allowed her to monetize her account.
Looking back, Calveiro wishes she could tell her younger self to “slow down.”
“I think what I would recommend to someone my age is, slow down on this lifestyle.”
How can Canadians avoid this?
Canadians who find themselves in debt can face some significant challenges down the line, Lunny said. These could range anywhere from cash flow challenges to the inability to purchase a home and mental health struggles.
To avoid this, Lunny said the simplest strategy is to spend less money than you make.
“A large percentage of Canadians, and particularly younger Canadians, are spending more money than they’re making. So as a result, they’re getting into debt and they’re rolling their credit card balances, which further reduces (their) cash flow because they’re paying their interest on their credit cards,” he said.
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Furthermore, he said there are a number of tools available to young Canadians through their banks to help them control their debt. Manulife, he said, offers automatic balance transfer to help young people build up savings and other digital tools to show people where they’re spending their money.
Other banks offer similar products. TD Canada Trust has the free TD MySpend app, which lets account holders track their debit and credit spending. The app will also notify you when you’re approaching and when you exceed your spending limit.
In addition to avoiding falling into debt, Lunny states that it’s important to plan ahead and save for life milestones, such as buying a home and retirement.
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He recommends automatically taking 10 per cent from each pay cheque and putting it into a savings account. This way, you won’t have it sitting in your chequing account where it will likely become spending money.
“And that will be the key to achieving your financial goals, whether that’s buying a house or paying off debt or ultimately having a comfortable retirement.”