What really matters anyway?
That’s what Nia Holland, 24, thought after spending $2,500 on a vintage Chanel bag, draining her savings. Earning little money with campus research jobs during graduate school, she knew her money could be better spent, saved or invested.
But at the same time, she said it didn’t feel irresponsible. With traditional milestones—like homeownership and a life with kids—so far out of reach, denying herself “little luxuries” wasn’t going to make a difference. And if anything, the lambskin tote with a 24-carat chain made her feel better.
“The economy sucks, there’s global warming, there’s constant political and social unrest globally,” said Holland, who is getting financial support from her family as she pursues a doctorate in education and psychology at the University of Michigan. “It’s just easier to spend money on things that will bring you immediate fulfillment.”
Typically, when people are on shaky ground economically, they pull back on spending. But, increasingly, younger generations are doing the opposite, figuring their financial futures are doomed no matter what. Higher student debt loads, an increased cost of living and shifts in the labor market have made it more difficult to achieve financial goals, like buying a house or saving for retirement.
As such, about 27% of Americans admit to “doom spending” to cope with concerns about the economy and foreign affairs, according to Credit Karma, a personal finance company. And the rates are even higher among Millennials and Gen Z, at 43% and 35% respectively.
“It’s a way to cope—albeit not the healthiest one,” said Courtney Alev, a consumer financial advocate at Credit Karma.
Fatalistic Tendencies
While doom spending may capture the economic zeitgeist of the day, the habit is hardly new. Stephen Wu, an economics professor at Hamilton College in Clinton, New York, published research in 2004, writing that those who feel luck and other outside factors play a significant role in their financial success are less likely save.
He argues feelings of fatalism and counterintuitive spending habits have become more common in recent years, particularly after the pandemic and Great Recession. That’s when people began to realize that “a large part of their successes and failures were out of their control,” Wu said.
How younger generations are able to swing big-ticket purchases may also come down to increased parental support. With nearly half of young people living at home, some are using the extra disposable income to treat themselves. It can be easy to think that’s reasonable too when social media is littered with images of young people splashing out on lavish meals, glamorous vacations and designer goods.