Gen Z 'doom spending': buying joy amid housing crisis

Gen Z 'doom spending': buying joy amid housing crisis

According to 2023 data from Psychology Today, 27% of US respondents admitted to overspending and 32% to taking on more debt in the last six months. Most were Millennials or Gen Z. The magazine coined the term 'doom spending' for this phenomenon: buying things to alleviate anxiety caused by economic uncertainty. This pattern repeats in Spain, Colombia, and the UK, and it is not just a whim of a few; it is an emotional response to a perceived closed financial horizon.

What is 'doom spending' and why is it rising?

The definition is simple: impulsive spending to manage stress related to economic or personal finance worries. Finance expert Ylva Baeckström, a professor at King's Business School, argues that the phenomenon stems from the constant flow of negative news young people receive via the internet and social media. Being chronically connected fosters a pessimistic view of the future, driving compulsive consumption patterns. A survey by Intuit Credit Karma shows that 96% of Americans are worried about the current state of the economy, and over a quarter admit to using spending to relieve stress.

Unaffordable housing and the math that breaks saving

The most common argument in the debate is not that young people lack management skills, but that saving no longer leads anywhere. A calculation circulating in discussions illustrates this: a young person who saves €500 a month for ten years—during their prime youth, without a car, motorcycle, or family—accumulates €60,000 devalued by inflation. With that money, they cannot buy even half of a modest apartment, let alone a dog house. Many conclude that sacrifice has no tangible reward, so it is better to enjoy the day-to-day. The feeling that they will never achieve their parents' milestones, such as homeownership, triggers a live-in-the-moment mentality, translating into travel, designer clothes, and tech gadgets.

The counterargument: saving doesn't miccionan letting money sit idle

Against this trend, another part of the analysis argues that saving does not miccionan leaving money dead in an account. One can invest in stocks, gold, cryptocurrencies for the risk-tolerant, or put down a deposit on a flat. There are accounts that remunerate savings and offset a significant portion of inflation. From this perspective, the problem is not a lack of alternatives, but the convenience of claiming that saving isn't worth it while spending every last cent on hedonism. The criticism is completed with a warning: later come the tears and requests for state bailouts. The discussion shifts to the cost of population aging and system sustainability, a terrain where positions become entrenched.

The role of financial education and differences between countries

One underlying cause cited is the lack of financial education. Understanding the importance of saving, investing, and planning could reduce the incidence of 'doom spending' and foster healthier consumption habits. But institutional incentives also matter: in the UK, it is argued, you are either rich or penalized for saving, because aid is only received if you have nothing; if you have savings, they wait until you spend them before helping. In Spain, critics point out that there is no incentive for saving and that the system is corrupted by this dynamic. International comparison does not resolve the debate, but it shows that behavior is not solely a matter of individual discipline.

How to curb impulsive spending: from cash to in-person shopping

Strategies proposed to combat 'doom spending' involve increasing the pain of paying. Opting for cash instead of digital methods like Apple Pay or Google Pay makes transactions feel more real and deters impulsive spending. Another tip is to shop in person rather than online: traveling to the store, evaluating the product, and queuing to pay allows for more conscious reflection on the actual need for the purchase. These measures, along with mental health work and self-control, can be effective in fostering more responsible financial behavior. The irony is that those who most need this brake have the least margin to apply it.

The future: between hedonism and debt

'Doom spending' presents itself as a false illusion of control in a world perceived as chaotic. Spending on products and experiences provides momentary pleasure but can lead to a more uncertain financial future. Instead of investing and saving, many young people direct their income toward purchases that offer no lasting value, worsening the difficulty of reaching long-term goals. The cautious prediction is that if access to housing remains blocked and inflation continues to erode purchasing power, compulsive spending will consolidate as the norm, not the exception. And then the problem will cease to be individual and become structural.