Over 51% of Americans made purchases or investments due to financial FOMO in 2025, signalling rising market risks

In an era where social media amplifies success stories and market hype travels at lightning speed, the fear of missing out—commonly known as FOMO—has emerged as a potent force shaping financial decisions across the United States. Recent surveys indicate that a significant portion of Americans, over half by some measures, have succumbed to this psychological pull, making purchases or investments driven by the anxiety of being left behind. This phenomenon not only influences individual portfolios but also ripples through broader market dynamics, potentially inflating asset bubbles and encouraging impulsive behaviour that deviates from sound financial planning.

The Psychology Behind Financial FOMO

Fear of missing out on financial opportunities stems from a blend of emotional and cognitive biases deeply rooted in human behaviour. Behavioural finance experts have long highlighted how FOMO can lead investors to chase trends, often at the expense of rational analysis. For instance, when viral narratives around cryptocurrencies or high-growth stocks dominate online discussions, individuals may feel compelled to participate, fearing exclusion from potential windfalls. A 2023 study published in the Journal of Financial Literacy and Wellbeing explored this, finding that FOMO has a stronger association with cryptocurrency ownership than with traditional stocks, mediated by factors like financial literacy and risk tolerance.

This impulse is particularly pronounced among younger demographics. Data from various sources suggest that millennials and Generation Z are especially susceptible, with social media platforms serving as amplifiers. Scrolling through feeds filled with tales of overnight millionaires or luxury lifestyles can trigger a sense of urgency, prompting hasty decisions. A report from Empower, dated around mid-2025, underscores this trend, revealing that a majority of younger Americans experience FOMO while engaging with online content, leading to increased spending and investment activity.

Impact on Purchasing Behaviour

Financial FOMO extends beyond investments into everyday consumer choices. Americans are increasingly making large purchases—such as electronics, vehicles, or even real estate—motivated by the perception that prices will rise or opportunities will vanish. A June 2025 study reported that half of Americans experience this form of FOMO, often inspired by others’ online achievements, which in turn motivates them to refine their own spending habits. This behaviour can manifest as “doom spending,” where individuals stockpile goods amid economic uncertainty, as seen in late 2024 surveys where 34% of respondents admitted to such practices ahead of potential policy changes like tariffs.

The consequences are twofold. On one hand, it stimulates short-term economic activity; on the other, it can strain personal finances, leading to higher debt levels. For example, a 2023 RBC Royal Bank analysis noted that FOMO-driven decisions often result in regrettable expenditures that derail long-term financial goals. With 30% of Americans cutting spending due to economic concerns as per a TD Bank survey in September 2024, the contrast highlights a bipolar financial landscape: caution in some quarters, impulsiveness in others.

FOMO’s Role in Investment Decisions

In the investment realm, FOMO can be particularly destructive, pushing individuals towards high-risk assets without due diligence. Historical trends show that during bull markets, such as the cryptocurrency boom of 2021, FOMO contributed to speculative bubbles. A 2024 ResearchGate publication examined this, concluding that emotional factors like FOMO significantly influence stock market behaviour, often leading to overvaluation and subsequent corrections.

Analysts warn that this bias can derail portfolios. Shari Greco Reiches, a behavioural finance expert, has pointed out in discussions around 2021 that FOMO encourages riskier bets, potentially leading to substantial losses. More recent data from 2025, including insights from Larry Swedroe’s analysis, describe “FOMO fever” as a driver of market volatility, where investors pile into trending assets, inflating prices beyond fundamentals.

To quantify the scale, consider that in a 2023 Cambridge University Press article, researchers found FOMO to be a key motivator in both stock and crypto investments, with context-specific measures showing stronger correlations. This aligns with 2024 FCA research in the UK, which, while not directly US-focused, highlighted that two in five younger investors regret hyped purchases—a sentiment echoed in American contexts.

Generational Differences and Broader Implications

Demographic breakdowns reveal stark variations. Generation Z, heavily influenced by social media, reports the highest incidence of FOMO-induced actions, with 70% feeling this pressure online as per 2025 data. Millennials follow closely, with 57% admitting to increased spending due to similar fears. In contrast, older generations exhibit more restraint, often bolstered by higher financial literacy.

These patterns have macroeconomic ramifications. Widespread FOMO can fuel asset inflation, as seen in housing markets where buyers rush in amid rising prices, only to face corrections. A Bank of America survey from August 2025 noted that 60% of homeowners and prospective buyers are uncertain about timing, partly due to such psychological pressures. Moreover, with 75% of US consumers stressed about financial emergencies (Forbes, September 2024), FOMO exacerbates vulnerability, potentially leading to a cycle of regret and reduced savings.

Strategies to Mitigate FOMO’s Effects

Combating financial FOMO requires a disciplined approach. Investors are advised to implement cooling-off periods before committing funds, as suggested in a 2025 Investopedia article. Thorough research and diversification remain cornerstones, with emphasis on aligning decisions with long-term goals rather than fleeting trends.

Financial education plays a pivotal role. Enhancing literacy can temper impulsiveness; the aforementioned 2023 study found that higher literacy reduces FOMO’s impact on crypto investments. Tools like automated savings plans or robo-advisors can also help maintain objectivity.

From a forecasting perspective, analyst models suggest that if FOMO continues unchecked, it could contribute to increased market volatility through 2026. Sentiment from credible sources, such as Morningstar analysts, indicates cautious optimism, marked explicitly as bearish on hype-driven sectors like speculative tech, based on Q2 2025 reports.

Case Studies and Historical Context

Historical parallels abound. The dot-com bubble of the late 1990s saw similar FOMO dynamics, where fear of missing tech gains led to overinvestment and a crash. More recently, the 2021 meme stock frenzy, involving assets like GameStop, exemplified how social media-fuelled FOMO can distort markets.

In 2022, amid rising prices, 25% of Americans delayed retirement plans due to market instability (BMO Real Financial Progress Index), a decision possibly influenced by FOMO in volatile assets. By 2023, 64% reported changing habits amid perceived recession, per Bankrate, illustrating how FOMO can pivot to fear during downturns.

Conclusion

Financial FOMO represents a double-edged sword in American economic behaviour, driving innovation and growth while risking instability and personal regret. As social media’s influence grows, understanding and managing this bias becomes essential for sustainable wealth-building. Investors who prioritise data over emotion stand to navigate these waters more effectively, turning potential pitfalls into opportunities for informed decision-making.

References

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• Cambridge University Press. (2023). Fear of missing out on cryptocurrency and stock investments: Direct and indirect effects of financial literacy and risk tolerance. Retrieved from https://www.cambridge.org/core/journals/journal-of-financial-literacy-and-wellbeing/article/fear-of-missing-out-on-cryptocurrency-and-stock-investments-direct-and-indirect-effects-of-financial-literacy-and-risk-tolerance/59806F268F1A96B46BDFE23E68B244B5
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