Young people are increasingly turning to “doom spending” as a coping mechanism for their economic stress and worries about the future. This term refers to the act of spending money on short-term, instant enjoyment rather than saving for the long-term. It could be described as Gen Z’s version of retail therapy.
The trend of doom spending has been fueled by social media, with many young people taking to platforms like TikTok to express their financial frustrations. A recent study by Credit Karma found that 43% of millennials and 35% of Gen Zs engage in doom spending to make themselves feel better.
One viral TikTok video by user Maria Melchor, also known as @firstgenliving, has been viewed over 1.7 million times. In the clip, she expresses the reality faced by many young people, saying, “We can’t afford anything else. Homeownership or starting a family is so out of reach that we are using that down payment or kid money on whatever it is that we can afford that will bring us the semblance of the kind of adulthood we were promised.”
The #TikTokMadeMeBuyIt trend on the platform, where users show off their recent purchases, has further amplified the idea of doom spending. With over 8.4 million videos posted under the hashtag, it is clear that this trend has become the norm for many young people.
Louise Hill, the chief executive and co-founder of Go Henry, explains that young people are often influenced to buy things they don’t need due to constant exposure to new products online. She also points out that a lack of financial education can contribute to this behavior, as many young people struggle with money management and differentiating between needs and wants.
The ongoing cost of living crisis, student loan debt, and the feeling of never being able to afford milestone purchases like a house can push young people towards doom spending. Social media also adds to the pressure, as young people see influencers and friends showcasing their latest purchases online.
While doom spending may seem like a harmless habit, it can lead to a cycle of struggling to save and potential financial trouble if people start borrowing money to fund it. Ms. Hill warns that turning to buy now, pay later plans can make the situation even more difficult.
She advises young people to set savings goals and work towards them instead of giving in to the instant gratification of buying something new. This practice of mindful spending can help prioritize essential items and reduce unnecessary expenses.
Ms. Hill also emphasizes the importance of understanding the link between money and self-esteem. “You can’t buy a lifestyle, and you won’t feel better about the future by spending too much now,” she says. By taking small steps like these, young people can gain the confidence to save for various goals, say no to peer pressure, and find better ways to cope with their financial worries.
