This past year doom spending has become an increasingly common financial behaviour, particularly among young people. This phrase refers to the habit of impulsively spending money to cope with feelings of stress, anxiety, or uncertainty, whether it’s fuelled by rising costs, job insecurity, or personal pressures. Although doom spending often provides short-term emotional relief it also has long-term consequences on your financial stability.
A recent study by Credit Karma found that 43% of millennials and 35% of Gen Zs doom spend to make themselves feel better. But what affect can this have in your financial future?
Key Factors Driving Doom Spending Among Younger Professionals
Economic Pressure
With the souring cost of housing, utilities, and everyday expenses, young professionals often find it challenging to save. Especially with the thought that buying your first home is out of reach for many. At the same time, student loan debt and credit card balances add to the burden. As disposable income dwindles, the urge to engage in emotional spending as a temporary escape increases.
Social Media Influence
The continued rise in social media and influencers who frequently showcase products and promote aspirational lifestyles, can exacerbate spending habits.
Ease Of Digital Payments
The simplicity of one-click purchases and buy-now-pay-later services, such as Klarna and Clearpay, makes it easier to spend money impulsively.
Instant Gratification Culture
The digital age has conditioned us to expect instant results and satisfaction. Whether it’s next-day deliveries or streaming services, our expectations for immediate rewards make it harder to resist the temptation of impulse buys.
The Financial Consequences Of Doom Spending
Doom spending may provide momentary relief, but it can have long-term financial consequences. Accumulating unnecessary debt, eroding savings, and developing poor money habits are just a few of the potential pitfalls. Another survey by Credit Karma found that 41% of UK adults reported experiencing ‘spending regret’ after making impulsive purchases, with 1 in 3 individuals under 30 acknowledging that emotional spending had led to financial hardship or debt.
For young professionals who are already navigating a complex economic landscape, doom spending can derail financial progress and delay key milestones such as buying a home, building an emergency fund, or investing for the future.
Budget and put money aside for an emergency fund
How To Take Control Of Your Spending Habits
Identify Emotional Figures
Recognising when and why you’re likely to engage in emotional spending is the first step. Are you more likely to spend impulsively when feeling stressed, anxious or overwhelmed? Identifying these triggers can help you implement coping mechanisms that don’t involve spending money.
Create A Realistic Budget
A well-structured budget gives you visibility into your income and expenses, helping you allocate funds for essential needs, savings, and discretionary spending. Budgeting apps like Monza and Hyper Jar offer tools to track spending in real-time and help avoid impulsive decisions.
Set Clear Financial Goals
Having concrete financial goals, such as saving for a home deposit, building an emergency fund, or investing in retirement, can help keep you focused on the bigger picture. By regularly reviewing your progress towards these goals, you’re less likely to indulge in short-term spending behaviours that detract from long-term success.
Seek Professional Guidance
If doom spending is having a significant impact on your financial health, consider speaking to a financial advisor. A tailored financial plan can help you manage debt, set achievable savings goals, and ensure you’re on track to meet your future financial objectives. Get in touch with our expert team, who’d be happy to help you reach financial success.
Financial Advice at Brancaster House
How Can We Help?
At Brancaster House Financial Planning, we’re here for your whole journey. We are passionate about helping you manage your money effectively. We will work with you to create a budget, look at your savings and advise on any potential investment opportunities to ensure you are making the most of your income.
Book a free financial health check with us to get started on understanding your financial situation or get in touch to find out more.
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