'Doom spending' takes hold among younger consumers

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Confronted with economic upheaval, some young consumers are coping with their anxiety by doom spending.

Credit Karma found 27% of Americans are doom spending, which the survey defined as “spending money despite concerns about the economy and foreign affairs to cope with stress.” Doom spending was most common with Gen Z (35%) and millennials (43%), according to Credit Karma’s report, conducted by data firm Qualtrics.

Chicago resident Jake Pierce, 25, doesn’t label himself as a doom spender but said he’s not worried about saving for the future.

“With inflation and the cost of living increasing, it makes me wonder where our world is heading. I know it won’t get better, and I would rather live it up and spend money as opposed to saving,” Pierce said.

Michelle Griffith, Chicago-based senior wealth adviser at Citi Personal Wealth Management, said it’s concerning. Many consumers she’s talked to don’t have hope that they can achieve the American dream.

“There will be a time when inflation and prices will continue to go down. The Fed is already talking about that. You see that on the horizon now,” Griffith said. “What I want [consumers] to recognize is inflation is cyclical. It doesn’t stay the same, and doom spenders have to keep that in mind.”

More than half of the estimated 1,000 survey respondents said they were living paycheck to paycheck, and nearly one-third said their debt has increased in the last six months, with millennials (38%) and Gen X (35%) reporting the highest debt.

Chicagoan Lukasz Dusza points to social media’s influence on spending habits.

“Open up your favorite social network, and you will find people posting photos of themselves on vacation or taking part in a glamorous weekend in a cabin with friends,” Dusza said. “I have friends that get drawn into ads and who are promoted to make a purchase, which I find to be silly and immature.”

The 23-year-old recently purchased a condo in Streeterville as an investment, with plans to renovate the unit and either sell or rent it out.

“I had built up a solid amount in savings, and instead of spending on a lavish vacation or the newest line of car, I invested in a tangible asset. An asset that will bode a return, rather than act as a liability,” Dusza said.

Chicago-based influencer Lucia Cordaro, 24, creates videos on her daily spending habits. She makes the videos to help her followers — roughly 12,000 on Instagram and 63,000 on TikTok — think more about where their money is going, she said.

Anthony Vazquez/Sun-Times

“I have received comments where people are like, ‘This inspired me to do my budget this month.’ I received DMs [direct messages] from people overwhelmed with budgeting, especially if they are in their early 20s and living alone for the first time as they become financially independent,” Cordaro said.

She said documenting her expenses through videos has helped her budget.

“The goal of my videos is to break things down on what a realistic budget could look like and be transparent with my own personal spending,” Cordaro said.

Griffith, of Citi, said doom spenders should focus on distinguishing between a need and a want, noting that over time it “will make a major difference.”

She also suggested creating a budget and opening a separate bank account that’s strictly for spending.

“I want doom spenders to know that they can’t control the inflation and economy, but they can control their choices,” Griffith said.