We’ve all been there: awake at 3 a.m., your mind racing between thoughts of work, school, and that weird thing you said at a party five years ago. Somehow, scrolling through the latest global catastrophes feels like the only thing that will help. Then, suddenly, a beacon of hope! Your algorithm supplies you with an ad for that ultra-lux, limited-edition, didn’t-know-you-needed-it, product, yours within 5-10 business days. Sure, it might be a little pricey, but with retirement feeling more and more like a luxury of a bygone era, why not treat yourself?
Welcome to doom spending, the new “it” pastime of Gen Z and Millennials. Whether it was for bespoke perfume, specialty kitty litter, or a vegan charcuterie board, when was the last time you spent money you didn't have to ease your anxiety about situations you don’t have control over? If the answer is anywhere from “recently,” to “right now,” you’re not alone. A recent survey found that 43% of Millennials admit to doom spending, along with 35% of Gen Z.1
It makes sense. Tumultuous times and bold, reckless actions have long gone hand-in-hand, which makes doom spending feel like an irresistible middle finger to a system that might seem stacked against you. The only catch? More often than not, spending money you don’t have not only feeds that very system, but also further disadvantages you (and your bank account) in the process.
Here are some things you can do to resist the allure:
1. ACKNOWLEDGE THE DOOM
Yes, that’s right. We’re not going to tell you it’s all in your head, or that everything will be okay if you “just think positively.” That’s because, as you’re likely already aware, times are tough right now. In a recent column for the Toronto Star, David Olive reported a 38.2% increase in the cost of groceries and a 69.3% increase in the cost of housing in just three years.2 With incomes largely not keeping pace, it’s no wonder that over half of 25-44 year olds reported having trouble meeting day-to-day expenses as of the spring of 2024.3 On a broader scale, this means that young people see the financial milestones of their parents’ generation—home ownership, retirement funds—as increasingly out of reach. Who can blame them?
2. ESTABLISH BOUNDARIES WITH THE DOOM
Because let’s be real, while doom spending feels exciting in the moment, how long does that high really last? It’s worth considering implementing something like a “no spending between 3-6 a.m. rule,” and removing your credit card information from your phone and other devices. If that’s not enough, stand up to your algorithm. Because even if there’ll always be days (and nights) when scrolling is a must, you still deserve some control over the images you consume. Instead of a bleak inundation of news headlines and snarky infographics, sprinkle in some accounts that show landscape shots of your dream vacation destinations, or even some cute animal accounts (legal eagles, anyone?) to keep the doom at bay.
3. USE THE DOOM TO YOUR ADVANTAGE
Enter doom saving, doom spending’s less glamorous, albeit eternally dependable cousin. What if instead of spending a hundred dollars a month on stuff you don’t need, you contributed half that much to a managed fund? We know you’re probably rolling your eyes right now, but bear with us. As someone in the early stages of your career or your financial literacy journey, it probably feels like reaching milestones like home ownership, paying off debt, or even going on vacation are ages away. But what if we told you that was a good thing? Compound interest doesn’t care how much money you have now, what kind of neighbourhood you grew up in, or how expensive your sneakers are. That’s because what compound interest really thrives on is time. This means that even if you contribute just $50 a month at a modest 5% rate of return, in 25 years you’ll have earned $14,775 on your contribution of $15,000, totaling a whopping $29,775.4 There’s a reason it’s called the eighth wonder of the world (TikTok’s algorithm has yet to receive that status).
FEAR WELL SPENT
While spending money you don’t have on items you don’t need is generally the kind of thing that makes most financial advice blog writers break out in hives, we’ll tell you a little secret: we get it. When you don’t know how you’re going to make it through today, let alone the end of the month, planning for a future 25 years from now might feel a little absurd. We promise it’s not. Tomorrow will come, and the day after that—whether you’re ready for it or not. And when you meet that future you 25 years down the road, wouldn’t you love to hand them thirty grand? “Here,” you might say to yourself. “You deserve it.”
We can help you help your future self. And the right-this-moment self that made it to the bottom of this page. Ask a financial planner about creating a budget that allows you to manage debt, save for your future, and live in the moment.
Book a pro bono financial planning meeting
Sources:
1. Psychology Today, “27% of Americans are ‘doom spending’ due to stress,” December 4, 2023.
2. Toronto Star, “Our cost-of-living crisis: In just three years rent and groceries are up nearly 40 per cent. There are solutions,” March 23, 2024.
3. Statistics Canada, “Nearly half of Canadians report that rising prices are greatly impacting their ability to meet day-to-day expenses,” August 24, 2024.
4. getsmarteraboutmoney.ca, Compound Interest Calculator.
