Westend61 | Westend61 | Getty Images
Some young people are splashing out on luxuries like travel and designer clothes instead of saving, in a trend that’s being characterized as “doom spending” on social media.
Doom spending is when a person mindlessly shops to self-soothe because they feel pessimistic about the economy and their future, according to Psychology Today.
It’s happening because young people are chronically online and feel like they’re constantly receiving “bad news,” she said. “It makes them feel like Armageddon.”
The practice is both “unhealthy and fatalistic,” Ylva Baeckström, a senior lecturer in finance at King’s Business School and a former banker, told CNBC Make It.
These young people are then translating these bad feelings into bad spending habits, Baeckström added.
In fact, 96% of Americans are concerned about the current state of the economy and more than a quarter are doom spending to deal with the stress, a Intuit Credit Karma survey of over 1,000 Americans found in November 2023.
And the phenomenon is not exclusive to America.
Stefania Troncoso Fernández, a 28-year-old publicist based in Colombia who lives with her parents, told CNBC Make It that she’s a recovered doom spender, but that high levels of inflation and political uncertainty make it very difficult to rationalize saving money.
“I know for a fact that food [costs] are getting higher and higher every day, and in my house we can’t afford to eat the same way we did maybe a year ago because things are getting more expensive,” Fernández said.
Two years ago, Fernández said she was spending carelessly on clothes and travel despite the fact that she was earning less money than she does now. It was largely because she felt like she couldn’t afford to buy a house.
“We used to have this program by the government that would lend us money to invest in real estate and at a really low rate, but with the change of government, that is not available for us anymore so we will need to pay more,” she said.
And Fernández said she’s not alone in doom spending. “It’s not just me. It’s something that is happening within my circle.”
CNBC’s International Your Money Financial Security Survey, conducted by Survey Monkey which questioned 4,342 adults globally.
“The generation growing up now is the first generation that’s going to be poorer than its parents for a very long time,” Baeckström said. “There’s that feeling that you might never be able to achieve what your parents achieved.”
As a result, doom spending creates the illusion of control in what feels like an out-of-control world, according to Baeckström.
“But what happens really, is that it gives you less control in the future, because if you save that money instead and invest it and do all of those things, you might actually be able to buy a house,” she said.
highest property prices in the U.S., according to a 2023 analysis by real estate website Point2. It found that 62% of properties listed in San Francisco cost over $1 million.
Goel says that since starting his fintech company Intrepid in 2023, his doom spending habit has “completely gone” because he’s found happiness in his work. “My whole mindset shifted.”