5 Ways Social Media Can Cost You Money

Social Media is Fun, But if You’re Not Careful it Can Cost You

Everybody seems to be jumping on the social media bandwagon these days and in just a few short years sites like Facebook and Twitter have hundreds of millions of users. Most people are aware of the fact that the things you talk about on these sites can often be viewed by a lot of people, so other than the occasional embarrassing photo getting out, most users refrain from posting detailed financial information for obvious reasons. But did you know that even if you aren’t posting your bank or credit card account information you can still be hurt financially by using social media sites?

Some are obvious, like not posting your bank account information online or badmouthing your boss, but there are a number of things that can come back to haunt you even if you feel as if you’re taking care of your online presence. Here are a few reasons why you need to be extra careful.

1. Employment

Employers are now using social media sites to check up on both current employees and prospective new hires. All they have to do is use Google to find your page on Facebook, MySpace, Twitter, or almost anywhere else. They will take a look at what you post on those sites and it can come back to haunt you if you post something they would disapprove of. In the past you just had to worry about keeping updated job skills and a clean resume, but things have changed.

Remember the famous incidents such as the infamous KFC Girls who took a bath in the restaurant sink or the Florida sheriff’s deputy who admitted his drinking problem and fascination with breasts on his MySpace page? These are some of the more extreme examples and I know most people wouldn’t go this far, but you don’t have to do something that outrageous to have it hurt your job prospects.
Especially if you’re trying to get a new job, just posting things that may even remotely cast a negative light on you, your personality, or work ethic can keep you from getting a job. If they don’t like what they find on your Facebook or Twitter, they won’t even hire you. If your current employer catches wind of a comment you made about your job, co-workers, or supervisor, it could lead to losing your job or be enough to keep you from getting a promotion or raise when the time comes.

To make matters worse, the very nature of these sites mean something you post could go viral, meaning that the entire world can hear about it. A random outburst, an embarrassing photo, or anything can spread across the web reaching millions and haunt your prospective employment opportunities forever. That picture of you with the lampshade on your head at the Christmas party might end up biting you somewhere besides your head.

Think twice about what you do on social media sites and understand that everything you say can have a huge financial impact on your life for years to come.

2. Tax and Debt Collection

While hurting your employment picture may pose a problem, there are new methods being used to hunt down people who aren’t paying their fair share. The IRS and debt collectors are scouring social media sites. If you’re cheating on your taxes or trying to escape a debt, the last thing you want to do is bring attention to it online even if you think only your friends are listening. In Minnesota, the IRS levied back taxes on the wages of a man who announced on his MySpace that he was moving back to his hometown as a real estate agent, and gave his employer’s name. So, the state was able to collect those back taxes by garnishing his wages. Oops.

Even if you aren’t trying to run from the IRS or debt collectors you should refrain from bragging about your financial situation. If you’re getting a significant tax break or talking about freelance income that you may not be fully reporting you’re opening yourself up for an audit.

It isn’t just people looking to get money from you that are watching. Insurers are also getting in on the act. If you’re collecting on a disability or any other insurance claim, don’t give the insurance companies any ammo that could prove otherwise. You may not deliberately be trying to commit insurance fraud, but even a slight embellishment can be a big problem.

3. Friends and Family

Most people use social media to keep up with friends and family. That’s great, but think about what you’re saying on there that you might not say in real life. Making a good money or get a raise and want to brag about it on Facebook? Don’t be surprised if friends and family start looking for you to pick up the check when you’re out to eat. Not only that, but if you come across as having money you could have relatives that are in need coming to you for help, and those requests are hard to resist. At the very least, they may ask you to co-sign a loan with them, which can mean big trouble for your credit if they don’t pay.

Another big mistake is when spouses aren’t completely honest with each other about money. You might think telling your girlfriends on Twitter about the new $300 purse you bought was a great deal, but when your husband finds out about your purchase online instead of from you directly you can probably expect an argument.

Be smart. If you wouldn’t say something to your friends over dinner, don’t say it online for the entire world to hear.

4. Online Scams

In the past, email was the preferred method of scamming people online. You know, the Nigerian prince who left you millions of dollars, fake online lotteries, and people posing as friends in need. Most of us wised up pretty quick when it comes to our inboxes, but now people are targeting social media sites.

There are Facebook viruses and people posting fake contests on Twitter every day, and it’s easy to get caught up in these scams. Sometimes they aren’t as blatant asking you to send money to some offshore bank account, but the information they can obtain from you just by clicking on a link can be devastating.

Even if you aren’t scammed out of money directly, the repercussions can go far beyond that. A hacker could take over your account and start posting messages as if they were coming from you. This could lure friends and family who may not be as savvy and they could wind up in trouble. Even worse, the remarks this person makes could scar your online identity forever, leading us back to the employment problem mentioned in the beginning.

5. Advertising

Finally, the world of advertising is changing. It’s not just about TV commercials and magazine ads any longer. Instead, you’re being peppered with ads on all of the social sites you visit. What makes this dangerous is that these sites know you and what you like, therefore giving you very targeted ads. In the past you may have flipped through a magazine only to find one or two products that really pertained to you. Now, almost every ad you see is being shown for a reason and you’re getting different ads than your friend who might be sitting in just the other room.

For instance, If you’re interested in sports, you’ll often see ads from sporting goods companies. It may go one step further and if you visit a lot of golf sites you may see nothing but golf ads. They’re startlingly effective. If you have a soft spot for a particular type of product and you’re getting bombarded with these targeted ads on a daily basis it can be hard to resist the urge. This can be costly.

Wrapping Up

In closing, it’s important to utilize these sites the best you can, but you do have to be careful and consider how it will affect your bottom line. From the completely benign new ads that you’re seeing online to the obvious mistakes where you talk about how drunk you got on a work night, these sites can prove costly if you’re not careful. Treat these sites like you would any other real social interaction. Behave online how you’d behave in person and project the right image on these social media sites.

All that being said, you can follow me on Twitter or follow this blog on Facebook.

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About the Author: Jeremy Vohwinkle is a Chartered Retirement Planning Counselor® and spent a few years working as a financial planner. Today, he helps people make the most of their money by writing about personal finance here and elsewhere on the web. Jeremy is also Coach at Adaptu and a regular contributor for other publications such as Intuit, and American Express. Be sure to follow Jeremy on Twitter or Google+.

8 comments
Chris Kulbaba
Chris Kulbaba

Your posting is timely and relevant - the New York Times posted an article today about employers hiring firms to do a background Social Media check. One worker commented "I want someone who speaks English when I call the helpline!" He lost the job because he appeared to have issues with immigrants. Another woman had some racy photos posted in her college website, and lost the job because of it.

Face it - there is NO expectation of privacy! You can cry and ballyhoo about the unfairness of it all, but if you put it out there, SOMEONE will keep a copy....and then it will find you later on.

Great article, and I agree with it all, but as an Employment specialist I wanted to comment on your first point directly.

Sam
Sam

Great post - particularly interesting about employers checking facebook etc before hiring, plus very interesting about the facebook & twitter scams. I'm going to be writing an article on that on my blog - mind if I link to this post?

Thanks for an interesting post

Sam

Melissa @PureFi
Melissa @PureFi

You bring up some good points, but to me it comes down to transparency. Social media offers a window into who you are and if there are parts of your life that you want to hide, you are in trouble. Or looking at it another way, maybe the folks around you are safer.

The value of creating networks via social media is immense - it can have huge economics value. I know many people who have found jobs and new business this way. In a cost/benefit analysis, I give a big thumbs up to social media.

Moneyedup
Moneyedup

You do have to be very careful about what you post online. Many of the ads on Facebook are scams, and a lot of them have to do with get rich quick schemes. I have heard of one scam advertised on FB where you pay $1 for some information about how to make millions using an ad program online then the company will begin making absurd deductions from your account and then give your credit card number to other companies. Be careful!

The Biz of Life
The Biz of Life

The biggest cost is wasted time. Don't post anything you wouldn't want printed on the front page of the newspaper.

Credit Girl
Credit Girl

You're right, Tracy! A lot of times not just on Twitter but even on Facebook people will post that they're going away on vacation. That's just a red flag for "Come and rob me!"

Beth
Beth

Good points! One thing I'd like to add is the cost of the stuff you need to use social media :) Those social media enabled mobile devices are so tempting...

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