Spending rashly to cheer ourselves up is nothing new but it’s recently escalated among millennials and Gen Zs. As negative political and economic news escalates on both sides of the Pond, Doom Spending is on the rise among UK and US consumers in particular.
Doom Spending – A reckless spiral
Many people on both sides of the Atlantic are feeling increasingly anxious about the state of politics, society and the economy.
Rather than drawing in our horns and saving money, however, an increasing number of us are Doom Spending: splashing the cash to give ourselves some much-needed cheer.
Doom spending
Doom spending is the latest buzz in retail. It’s when people spend recklessly to sooth their anxiety.
It’s been a discernible trend among American millennials (people born between around 1981-1996) and Gen Zs (people born between around 1997-2010).
Owing to the growth of social media-based shopping and easy-access ‘buy now pay later’ schemes from companies such as Klarna, it’s now spreading fast in the UK as well, according to Parcelhero.
Parcelhero’s Head of Consumer Research, David Jinks says: “Retail therapy is nothing new, but what is causing increasing concern is the growth of Doom Spending, defined by the international e-commerce analysts ECDB as the self-soothing behaviour of purchasing products, despite personal financial strain, to relieve psychological stress.”
The rise of social commerce is fuelling the growth of doom spending. Many of us are in the habit of “Doom Scrolling”: watching endless negative news on TikTok and other social media sites despite the fact we end up depressed.
It’s all too easy to then watch influencers marketing products and snap up items we don’t really need as a temporary feel-good fix. It’s a cycle that is then repeated once the rush from that purchase wears away.
A recent study by Credit Karma found 43% of millennials and 35% of Gen Zs Doom Spend to make themselves feel better.
“People aren’t just buying non-essential “nice to haves” such as a new pair of trainers,” continues Jinks. “Increasingly, they are also making more expensive purchases such as cars and holidays.”
The escalating difficulty of obtaining affordable first-time mortgages has caused younger people to give up on their dream of home ownership. Instead, they are splurging their hard-earned savings on something a little more attainable, like a new car or a great experience.
It’s tempting, but it’s short-term thinking
Doom spending is becoming an increasingly easy trap to fall into. Online shopping gives us that buzz with just one click of a button, while staggered payment options from the likes of Klarna and PayPal Credit make it deceptively swift and painless.
As a result, there is concern that social commerce targets users who may be particularly susceptible to Doom Spending.
The #TikTokMadeMeBuyIt trend, where many millions of users show off the latest items they have bought via the platform and other sites, reveals just how popular this latest form of retail therapy has become. It also gives a false sense of safety in numbers – there is no “We” in personal debt.
‘In the US, steps have been taken to curb the cycle of doom spending.
For example, America is introducing new legislation insisting on simple “click to cancel” subscription requirements and ending regular subscription renewals without active consent from consumers.
While US and UK consumers may suffer from similar anxieties, there are many examples of differences between the UK and US in terms of consumer laws.
“Fortunately, there are steps consumers who are tempted to indulge in Doom spending can take to control their purchases,” says Jinks.
“Of course, one of these measures is careful financial planning to work out what “spare” income – if any – there is each month. Other steps include enabling banking notifications and keeping a spending journal to monitor our purchases.”
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