A growing trend among Gen Z and millennials, known as "doom spending," has emerged where many splurge on luxuries like travel and designer clothes instead of saving. This behavior is believed to be driven by uncertainty about the economy and bleak prospects.

What Is Doom Spending?

Doom spending occurs when individuals shop impulsively as a way to cope with pessimism about the economy and their future. Being constantly exposed to negative news online can lead to feelings of anxiety and hopelessness, causing some to spend as a form of self-soothing. Financial experts describe this habit as both unhealthy and fatalistic, with many young people translating their anxieties into spending habits that could be harmful in the long run.

A recent survey found that 96% of Americans are concerned about the economy, with more than a quarter turning to doom spending to manage their stress. This trend is not confined to the United States; it's happening on a global scale.

The Global Perspective

Rising inflation and economic uncertainty in many countries have made it difficult for young people to justify saving, especially when they face high costs for essentials and fewer government support programs. These challenges make it hard for some to feel confident about saving for future goals, such as buying a home, further driving the urge to spend on short-term luxuries.

A survey conducted on a global scale revealed that only about 37% of adults feel they are doing better than their parents, while 43% believe they're worse off, fuelling feelings of hopelessness and a sense of financial insecurity compared to previous generations.

Why Is Doom Spending So Appealing?

Doom spending can offer a temporary sense of control in an unpredictable world, providing a momentary escape from financial worries. However, this practice often leads to decreased financial security in the long term, as the money spent could have been saved or invested instead, and is particularly relevant in areas with high living costs, where the possibility of achieving long-term financial goals, like homeownership, may feel out of reach.

Real-life Examples

Many young professionals working in high-cost urban areas have reported engaging in doom spending when feeling dissatisfied with their jobs or financial situation. For some, this has meant spending on luxury items, expensive technology, or entertainment as a way to cope with stress and uncertainty. However, those who have found fulfillment in their work or developed a clearer sense of financial purpose have often seen their spending habits improve.

How to Break Free from Doom Spending

To address doom spending, financial experts suggest understanding one's relationship with money, which is often shaped by upbringing and family attitudes toward finances. A lack of financial literacy can contribute to unhealthy spending habits, making it harder to save or invest for the future.

One effective way to reduce doom spending is to make transactions feel more "real" by shopping in person rather than online, where impulsive purchases are easier. Setting up mobile banking notifications can also help, as they make each transaction more noticeable, encouraging greater awareness of spending habits.

Ultimately, overcoming doom spending requires recognizing the emotional triggers behind it and developing habits that promote mindful spending and saving.