What Really Drives Your Spending? Hint: Social Influence

Amit Smaja
5 days ago
7 min read

"Financial clarity isn’t knowing how much you spent, it’s understanding where you’re heading."

Imagine this moment, not a movie scene, just real life. You finally sink into the couch after a long day, and then ping. A notification from the bank. You already know what it says, another number, another reminder that your money has a life of its own and you’re just trying to keep up. You have advanced apps, access to every data point you could dream of, you even know exactly how much your morning coffee cost. And yet, when you look at your bank account, you feel like you’re going in circles.

And it’s not just you. The data reveals something hard to digest. In an age of transparency and endless information, more than 60 percent of people do not truly understand the basic financial concepts that shape their lives. We know how to type numbers into Excel but not how to interpret them. Even stranger, those who do everything "right" tracking, recording, monitoring are exactly the ones reporting the highest levels of financial anxiety.

So how is it possible that we are equipped with more powerful tools than ever, yet feel like we’re missing something fundamental? Why doesn’t the feeling of control arrive, even when we know every number?

Here comes the answer that changes everything: The problem isn’t information. The problem is context.

You don’t get context from a table or a mobile app. You get it from the social world around you. From your environment, your friends, your feed, the norms you absorb every day. Only that the social echo we live in today sends the opposite of clarity. It sends pressure, consumption, endless comparison, and a chase after standards that don’t exist in real life.

Your financial choices aren’t really yours. They’re not based only on your income. They’re shaped by what your friends buy, what your feed shows you, what looks "right" in other people’s lives.

The bad news? These forces push you toward unnecessary spending, impulsive decisions, and growing financial anxiety.

The good news? The very same forces imitation, comparison, and social norms can become engines of positive change.

What would happen if we built a different echo? One where people like you share the truth, not the polished image? One where comparison brings clarity instead of pressure?

A man views a smartphone projection contrasting chaotic social financial pressure with the organized clarity of the EchoNomics dashboard.

Why We Actually Behave the Way We Do with Money?

In 1954, psychologist Leon Festinger discovered something fascinating. Humans have a deep need to evaluate themselves by comparing to others. When you lack an objective benchmark, for example whether your grocery spending is high or low, you turn to similar people to understand where you stand.

In other words: you don’t decide how much to save or spend based only on your needs. You decide based on what people like you do.

The problem: you are comparing yourself to people who don’t really exist.

On social media you only see successes, vacations, and curated shopping sprees.

57 percent of people say social media influenced their financial decisions, and 73 percent say it changed their spending habits. Among Gen Z, 70 percent report financial FOMO, and 44 percent say social pressure leads them to overspend.

A Cambridge study found something even more shocking. When people were compared to others under social pressure, they chose options with lower expected value and higher risk.

Meaning: social comparison doesn’t just change your decisions, it makes them worse.

But What If Social Influence Could Work For You?

Here’s the turning point. If social influence is such a powerful force, why not use it properly?

The gap we described, between too much data and too little clarity, exists because our comparisons are made against the wrong models. But when comparison is done against people who truly resemble you, it restores context, reduces confusion, and leads to smarter decision-making.

A Columbia University study tested savings groups in which participants met regularly, set public goals, and shared progress. The results were extraordinary. Participants saved 3.7 times more and had savings balances twice as high as people who were not in such groups.

Not because they earned more. Because their social environment supported saving, and imitation finally had a healthy target.

Another study examined an app that shows spending habits of similar peers. Users who discovered they spent more than their peers reduced their spending by nine percent. Those who discovered they spent less increased spending by just one percent.

What does this mean? When the picture becomes clear and the norm encourages saving, imitation becomes a tool for growth.

Three Forces That Shape Your Financial Behavior

Before exploring the three psychological forces influencing you every day, it’s important to understand the logic tying them together. Each force represents a natural mechanism through which your environment shapes you, for better or worse. The difference lies not in the mechanism, but in the context. Redirect these forces in the right direction, and they become tools that sharpen clarity and create meaningful change.

Social Imitation - When Inspiration Replaces Trial and Error

Research shows that imitation is a basic social mechanism that creates connection and identification. Albert Bandura demonstrated in the 1960s how much we learn through observation and imitation.

Imagine a student watching a roommate start a "no spending challenge" for a week. No coffee outside, no takeout. If the roommate saves 300 NIS that month, chances are the student will try it too.

2. Peer Benchmarking - Real Perspective

A young woman who thinks "everyone my age already bought an apartment" may discover that most people in their 30s still rent. A young man who fears his expenses are too high can compare his spending distribution to similar people and realize he is actually within the normal range.

This kind of information doesn’t undermine your confidence. It creates relief and clarity.

And if the comparison shows you’re behind? That’s exactly the jolt you need to begin changing.

3. The Wisdom of Crowds - The Collective Is Smarter Than the Individual

James Surowiecki showed in his book "The Wisdom of Crowds" that large, diverse groups can make better decisions than experts. The classic example: a diverse crowd guessed the weight of an ox, and the average was more accurate than the experts.

In financial terms, when enough people share information about their spending habits, a broader picture emerges that everyone can benefit from. For example, if a community finance app analyzes thousands of users and finds that young adults who spend more than 40 percent of their income on housing report high financial stress, that’s an actionable insight.

EchoNomics: Not Just Another Finance App

This is where EchoNomics comes in. A platform built specifically to harness these forces.

Peer-based comparison: Not with influencers, but with people your age, at your income level, in your life stage. This gives you real perspective on where you stand.

Real-time anomaly detection: If your entertainment spending spikes 40 percent above your usual month or above similar peers, the system alerts you. It’s not criticism. It’s clarity.

AI-powered actionable insights: The system doesn’t say "save more". It identifies specific opportunities. If you’re spending 20 percent more on delivery food, it offers steps to reduce it, ranked by impact versus effort.

A supportive community: People share, learn, and grow together. Research shows that financial support communities lead to less anxiety, more confidence, and greater follow-through on goals.

Think of it like this. If your friend tells you he saved 600 NIS this month just by following smart alerts that adjusted his spending, that’s not theory. That’s social proof. That’s motivation. EchoNomics turns this into a system: you see real patterns, identify opportunities, and act at the right moment.

From Social Echo to EchoNomics: Redefining the Financial Environment of a Generation

Our social environment constantly sends us an "echo" a repeating signal of norms and expectations. On Instagram and TikTok, that echo is consumption, pressure, and toxic comparison.

But we can build another echo. One of clarity, responsibility, smart saving, real sharing, and collective wisdom. Instead of an environment that tells you "buy more", it can tell you "save smarter". Instead of making you feel inferior, it can help you understand where you truly stand and what your next step should be.

Because comparison doesn’t have to lead to fear. It can lead to growth. Imitation doesn’t have to lead to debt. It can lead to resilience. Belonging doesn’t have to be built on what you have, but on what you’re building together.

It’s time to turn comparison into a tool that works for you, not against you. You’re not alone in this journey, and that’s exactly your strength.

This article is based on academic and contemporary research in economic psychology and financial behavior:

Academic Research:

Recent Sources (2023-2025):

Israeli Sources: