Doom Spending Meaning: As per the Pew Research Centre, individuals born between the years 1997 and 2012 are called Gen Z. The onslaught of the Covid-19 pandemic coincided with the coming-of-age of Gen Z. While the Covid pandemic itself led to a general sense of doom and gloom, soon constant geopolitical upheaval in the form of international conflicts such as the Russia-Ukraine war and the Israel-Palestine conflict were added to the mix. Amid this all-pervasive sense of doom and gloom, a desire to self-soothe turned many Gen Zs towards ‘doom-spending’.
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Understanding the way Generation Z spends money becomes important as the cohort currently makes up 40 per cent of India’s population at 377 million according to a report by Boston Consulting Group and Snapchat. The report also projects the cohort’s spending power to increase and comprise 46 per cent or $1.8 trillion dollars of total Indian consumer spending by 2035 .
What Is Doom Spending
While there’s no one concrete definition of doom-spending, the trend widely perpetuated by social media involves members of the Gen Z cohort splurging on luxuries such as exotic vacations and luxury clothes amid an uncertain financial future. As per the American media organisation Psychology Today, when a person buys things to self-soothe to feel less pessimistic about the economy and their future, the behavioural trend is called ‘doomspending’.
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The act of doom spending follows a trend from behavioural economics called the ‘present bias’. Present bias refers to the tendency to prioritise the current situation over the future and making decisions which do not factor in long-term consequences.
Apart from a general sense of uncertainty, several factors such as stagnating salary growth, easy access to credit and ‘buy-now-pay-later’ programs enable Gen Z to practice doom spending.
Additionally, such spending is also triggered by pressure from social media trends from influencer culture, which is a major part of social media content wherein individuals implicitly or explicitly convince people to buy products. According to a report by Shopify India approximately 57 per cent of Gen Z buyers are is likely to purchase a product based on an influencer’s review and 32 per cent of Gen Z admitted to recently gaining trust in a brand because of an influencer.
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Dangers of Doom Spending
Doom spending can potentially have both long-term and short-term impacts on your finances. Individuals run the risk of falling into debt if they do not curb their urge to doomspend and keep on buying things on credit. On the other hand, a potential long-term impact of doom spending is habit formation, which can then lead to individuals resorting to doom-spending perpetually and ruining their fiscal health by borrowing more and more to sustain their habit.
How To Curb Doom Spending
Some common behavioural changes can help GenZs in curbing their doom-spending habit. One possible solution can be taking a break from social media and finding other forms of self-care such as spending time in hobbies. Budgeting your expenses in advance and keeping a small sum aside for spending on leisure activities can also help in controlling the urge to splurge.
