Read Time: 4-minutes
Happy Saturday,
Here is this week’s edition of 6-Point Saturday — financial insights to help you make smarter money decisions.
Table of Contents*
*Clickable in the online version.
Point #1 — Your Money & The Bourne Ultimatum
In 2006, Matt Damon was working on The Bourne Ultimatum when his phone rang. It was James Cameron.
Cameron wanted Damon to play the lead in his next film, Avatar. He also wanted to sweeten the deal and his pitch was pretty direct:
"I don't need a name for this. The movie doesn't need you. The idea is the star. It's going to work. But if you do it, I'll give you 10% of the movie."
Damon’s thought process:
"I was in the middle of shooting The Bourne Ultimatum and he wanted to shoot during our post-production. We always needed more work in our post-production. I needed to be around. I needed to be available to do more work in our post-production."
So, Damon respectfully declined.
And Avatar went on to gross $2.9 billion at the box office.
Damon's estimated cut: around $250 million.
“You will never meet an actor who turned down more money."
Talk about a worst-case scenario.
Granted, hindsight is 20/20. In 2006, nobody knew Avatar would become the highest-grossing film of all time. Damon made a reasonable, principled decision with the information he had.
But this potential for feeling regret is the basis for one of the most destructive emotions in personal finance:
FOMO, or Fear Of Missing Out.
FOMO is the fear that something valuable is passing you by right now, and you need to act or you'll regret it forever. It's a feeling that pressures you to compress your decision-making and bypass your judgment.
The problem is that FOMO rarely points you toward better decisions. More often, it points you toward faster ones. You act on things you'd have otherwise declined. You say yes to things that don't fit your budget or your actual goals. You end up spending money to quiet the feeling, not because the thing was actually worth it.
You see the Amazon Big Spring Sale and suddenly need things you weren't thinking about the day before. You hear about limited access to the SpaceX IPO and feel like your investments are going to be behind. A group trip gets planned and you say yes even though the timing is terrible for your budget.
So let's look at 4 ways to prevent FOMO from making your financial decisions for you.
Point #2 — The 4 Steps to Avoid Financial FOMO
1. Get clear on your values and goals.
FOMO thrives in a vacuum. When you don't have a clear sense of what you're actually working toward, every opportunity can feel like one you might be missing.
For example, your friends are buying their first home and it makes you wonder whether you should be doing the same. But when you think about it, you’re at the point in your life where you value flexibility. You want to keep your options open to other cities to explore better career opportunities. So, it would be inappropriate to view your decision to continue renting as “missing out.” It’s living a life aligned with your values.
If you haven’t already, get clear on your values and write down your top two or three financial goals. When FOMO shows up, that list is your first line of defense.
2. Get some perspective.
With finances, it's easy to think the grass is always greener. In the age of social media, everyone tends to share their highlights, and you're left feeling inadequate.
Here's a question worth asking yourself: What do you have today that you would've loved to have just a couple of years ago?
A job that pays well? A savings account that's growing? A plan that didn't exist before? Most people who feel FOMO about where they're going have forgotten how far they've already come.
Taking a moment to appreciate that can reduce the urge to act on your FOMO impulses.
3. Identify your vulnerable situations & prepare ahead of time.
FOMO can actually appear in fairly predictable patterns: when you're scrolling at 11 pm, when a sale email hits your inbox, or when you open your trading app and see a ticker that's up 20%.
The fix is removing the underlying trigger.
Unsubscribe from retailer emails and texts. Turn off push notifications you don't actually need. If checking your portfolio daily is making you anxious or itchy to act, schedule weekly or monthly times to check-in. Yes, interest rates, geopolitical news, and whatever just moved in the market, can make it feel like there's always something to monitor. But, for most long-term investors, there usually isn't.
4. Automate your habits.
Automation makes willpower feel effortless. When your savings transfer, retirement contribution, and debt paydown run on their own, the decision is already made before FOMO ever shows up. Your 401(k) contribution hits before you see the money. Your emergency fund grows without you having to think about it. The system works whether you're feeling disciplined or not.
Your Move:
Think about when you typically feel FOMO around your finances. What’s one way you could avoid the situation entirely?
Point #3 — “Serious Case of FOMO”
“Over the past decade or so, I have watched my friends' home values go up 75%. Given that their initial downpayment was 5 or 10%, that is a quite a extraordinary return on initial investment. And it has given me quite a case of FOMO.
I work at a university just outside a major city in a VHCOL suburb [with my partner, both in 40’s] & live in a university-owned apartment (1-bedroom+1bathroom +1den/office/makeshift bedroom for overnight guests). Though the apartment is a bit dated (for e.g. cabinets from the 90s and insufficient kitchen ventilation) and gets a little cramped (especially when we have visitors), I like this arrangement because I don't have a commute and we are close enough to the city to enjoy its many cultural amenities. We enjoy living on the bucolic campus with a tight-knit community.
Plus the university charges me comparatively low rent ($2100 per month, including utilities), which my partner and I split. A comparable apartment off-campus would cost $3500/month. I make $95K/year and my partner makes $110K/year. The money we save on housing, we stuff it into our 401Ks (current balance on my 401K is about $400K)
Now that I have [a] serious case of house-buying FOMO, I have started looking to buy. The only houses we like and can afford to buy are in the exurbs, which would add a commute (40-minutes each way 3-times a week) for me (my partner works from home) and put us that much further from the city. Our housing costs would increase to $5,500 per month, leaving us with less to put into our 401Ks. We do not have children (though we do have a cat) and see little benefit of moving to the exurbs than to be able to own a home with the hope of cash-in on the the next big wave of home value appreciation. The downsides are increased commuting and social isolation...
I know I sound crazy for wanting to swap community, connections, and easy access to museums for debt-financed quartz countertops-studded house at the edge of civilization, but where else can you obtain so much leverage for purchasing an asset, with government-subsidized loan-no less. What am I missing?”
First, credit where it's due. This person laid out the tradeoffs pretty clearly here. The main thing making this feel complicated is FOMO. A few items worth noting:
The leverage argument deserves a closer look. Yes, real estate can offer unusual access to leverage with a government-backed loan. But they also need to account for mortgage interest, property taxes, maintenance costs, and the opportunity cost of the down payment before concluding that their friends came out ahead. Their actual financial position relative to those friends is probably a lot closer than it looks.
Meanwhile, they're sitting on a valuable structural advantage. They're saving $1,400 a month compared to renting off-campus. That's $16,800 a year flowing into retirement accounts instead. A setup that allows a 40-something to easily build on a $400K 401(k) balance is a pretty nice asset.
Generally, it’s safer to think about homeownership as a lifestyle expense rather than a strong investment. Historically, residential real estate has returned somewhere in the range of 2% to 5% annually, compared to roughly 8% to 12% for the stock market over the long term. Sometimes a home appreciates significantly. Sometimes it doesn't. So, banking on the “next wave of appreciation” is assuming the best-case scenario plays out.
I think they intuitively already know the answer to this decision. They described the house they want as "debt-financed quartz countertops at the edge of civilization." That's not a person who sounds like they really want the house. That's a person who wants to feel like they're not missing out.
Point #4 — You’re Not Alone in Feeling FOMO
FOMO can make you feel like everyone else has it figured out and you're the only one watching from the sidelines.
The CFP Board recently surveyed Americans to quantify how common this feeling is and where it shows up.
Most revealing, the survey found 6 out of 7 Americans — 85% — felt out of sync with their friends’ spending.
The survey also details the specific spending areas where respondents felt FOMO the most:
So, the next time you’re struggling with FOMO, remind yourself that you’re definitely not alone.
Point #5 — Quotes of the Week
Which of these quotes resonates most with you?
“Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?”
Point #6 — My Question of the Week
Think about a time you felt FOMO and resisted (e.g., didn’t chase an investment, declined a pricey trip, ignored a last-minute sale). What helped you overcome the temptation?
Reply to let me know! I read every response.
Thanks for reading — I hope you found a helpful idea or two.
I’ll see you next Saturday with more.
Have a great weekend,
Benjamin Daniel, CFP®
Founder, Money Wisdom
P.S. Want to take control of your money, stop stressing about your expenses, & feel confident about your financial future? There are 2 ways I can help you:
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Disclaimer:
This material is not investment or tax advice. No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading this material can be accepted by the publisher.
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