“Doom spending” refers to a phenomenon that occurs when people spend money to cope with stress, despite concerns about the economy and foreign affairs, according to a 2023 study by Qualtrics on behalf of Intuit Credit Karma.
You might, for example, worry because you don’t have enough money to pay your bills, save and have fun. As a result, you may skip the saving step and splurge on a shopping spree to make yourself feel better.
If that sounds familiar, you’re not alone. Doom spending is trending in the U.S. Here’s a closer look at who it’s affecting most, the causes and how experts say you can avoid it.
Younger Generations Are Leading The Doom Spending Charge
The Intuit Credit Karma study found that a little more than a quarter (27%) of all Americans doom spend to cope with stress, including 35% of Gen Zers and 43% of millennials.
“Many young people are discouraged right now. Housing prices are very high — both rent and purchasing. I’ve heard many millennials and Gen Zers say they know they’ll never be able to afford a home of their own,” Kendall Meade, a certified financial planner at SoFi, said in an email.
She explained that many younger folks also have student loan payments and are so overwhelmed that they just spend whatever’s left each month instead of saving it.
“These cohorts have come of age in a period marked by economic instability, stagnant wages and increasing living costs, which can lead to heightened financial anxiety,” Cameron Burskey, a partner and managing director of Retirement Security at Cornerstone Financial Services, said in an email.
He added that younger individuals often lack the financial literacy and long-term perspective needed to resist impulsive spending, especially when faced with the immediacy of stressors.
What Is Fueling Doom Spending?
Nearly all Americans (96%) are concerned about the current state of the economy and two-thirds say it’s giving them anxiety, according to the study. Some of the most pressing stressors include inflation, the inability to afford necessities, going into debt and not having money to spend on things that bring happiness.
These feelings are understandable, as the cost of living has increased by 20.8% since 2020.
“I believe that with inflation increasing so much over the past few years, people are very discouraged that their paychecks aren’t going as far. They’ve given up on accomplishing their goals and are just trying to survive but want to treat themselves however they can,” Meade said.
She added that credit card debt and interest rates have also increased, so debt payments are consuming a larger part of people’s disposable income.
Social media can further worsen the problem. “The rise of social media may exacerbate feelings of inadequacy or FOMO (fear of missing out), driving individuals to spend in an attempt to keep up with perceived societal norms,” Burskey said.
While understandable, spending to cope with financial stress can quickly lead to a downward spiral. In 2023, about one-third of Americans reported an increase in debt and nearly half said their savings balances had decreased.
[READ: How to Create a Saving Strategy]
Tips to Avoiding Doom Spending
If you’ve been tempted to doom spend, here’s what experts say you can do to curb the urge.
Use a Budgeting Framework
A good place to start is with a budgeting framework. For example, Meade recommends the 50/30/20 rule, which involves allocating 50% of your income to your essential expenses, 30% to discretionary expenses and 20% to other goals. With this approach, you can use some money for fun while ensuring you’re also working toward long-term goals.
Address the Underlying Emotions
Doom spending aims to alleviate stress, but it’s a fleeting fix.
“It’s crucial to cultivate mindfulness and self-awareness regarding spending triggers. Identifying the underlying emotions driving impulsive purchases can help individuals develop healthier coping mechanisms,” Burskey said.
[Read: Inside the Psychology of Overspending and How to Stop.]
Automate Beneficial Behaviors
You can also consider automating certain behaviors so you don’t have to rely on your willpower month after month.
“Automate your bill payments, savings and/or investments,” Meade said. For example, you can set up direct deposit so a portion of your paycheck goes directly into a savings account each pay period before you even see it.
Look for Low-Cost and Free Things to Do
Next, consider how you can stay active and entertained without spending much money.
“What worked for my family has been a focus on the free,” Clint McCalla, a certified financial planner at MEIRA Wealth in Austin, Texas, said in an email. He recommended taking advantage of community libraries, going on walks or to a park, listening to music, reading, watching long-form videos on YouTube about things you enjoy and playing games at home.
[READ: Fun Things to Do in Your Free Time That Cost Nothing]
Aim for a Balance
Spending money on yourself and things you enjoy is a healthy part of any budget. It can become a problem, however, if your spending gets out of control or isn’t part of a larger financial plan.
“By fostering financial literacy, promoting mindfulness and encouraging responsible spending habits, individuals can mitigate the negative impacts of stress-induced spending and work towards long-term financial well-being,” Burskey said.
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What Is Doom Spending and How Can You Avoid It? originally appeared on usnews.com
