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Frugal Living Tip – Can You Lose Money by Being Social?

There’s a lot of pressure these days to join popular social networks like Facebook, LinkedIn, MySpace and Classmates.com.

Social networking sites promise the thrill of reconnecting with old friends and the excitement of possibly making new ones. You may get messages from contacts who have already joined one of these sites urging you to sign up and participate. Even if you’re not into chatting online, you might be tempted with the thought of forging valuable new business connections with a bit of virtual networking.

social media bandwagonBut could participating in social networks actually end up being a costly financial decision? In a recent article on SavingAdvice.com, Jennifer Derrick argues that participating in social networks can be an expensive proposition.

Derrick makes some interesting arguments, such that revealing detailed information about yourself in an online profile might leave you vulnerable to identity theft or provide opposing attorneys with plenty of ammunition if you ever get taken to court.

But her most persuasive point concerns the opportunity costs of social networking. The point here is not just that you probably won’t make any money by participating in social networking, but that you’ll most likely end up losing money as a consequence of wasting countless hours trying to track down the boy/girl who sat next to you in Social Studies class back in the 6th grade.

Your time is valuable. Use it wisely. Participating in a social network (or playing an online game, surfing news sites, watching YouTube videos, etc.) may be technically free, but there is a cost to all of these time-wasting activities.

Would Mozart have composed as many symphonies if he had gotten sidetracked downloading the latest tunes from Amazon.com? Would Einstein have figured out the Theory of Relativity if he had been checking out the profiles of other scientists on Wikipedia? Would Thomas Edison have invented the phonograph and commercialized the light bulb if he had been focused on building his Friendster profile?

The lesson – Consider the opportunity cost of your time. Don’t be so focused on saving money that you spend hours perusing coupon sites to save $10 if you could have made $100 by creating or selling products or services during that time. Don’t be penny-wise and pound-foolish.

That’s not to say that you shouldn’t participate in social networking as a source of amusement, fun and relaxation. You might even be able to glean some business benefits if you use the sites smartly for networking purposes.

But recognize that all the social networking sites can become time-wasters and stop at least a couple of times per month to ask yourself whether your opportunity costs of social networking justify whatever personal or professional benefit you derive from the sites.

2 comments

1 Joshua UnsethNo Gravatar { 10.14.09 at 7:50 am }

Don’t you think that social networking is a great way to build a brand strategy though?

2 aaronNo Gravatar { 10.14.09 at 9:27 am }

Thanks for the comment, Joshua.

Social networking can certainly be a component of brand strategy – as long as you use your social networking time deliberately and with focus.

The danger with social networking is getting distracted or so caught up in the complexity of the social web that you lose focus on your business goals.

So by all means participate in social networking – just don’t let it take over your life or distract from other important offline business activities!

- Dollar Days Blog Moderator



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