Jakarta, Indonesia Sentinel — Millennials and Generation Z are increasingly at risk of becoming the first generation in modern history to be poorer than their parents. This alarming trend is largely attributed to impulsive spending habits, often referred to as “doom spending,” and a reluctance to save. Experts warn that this financial behavior may jeopardize their long-term stability.
What Is “Doom Spending”?
“Doom spending” is a phenomenon where individuals make impulsive purchases as a way to cope with feelings of anxiety or pessimism about the future. According to CNBC Make It, many Millennials and Gen Z members prioritize luxury goods and vacations over building savings.
Ylva Baeckstrom, a senior finance lecturer at King’s Business School, explains that exposure to constant negative news, particularly through social media, fosters a sense of hopelessness among younger generations. “This makes them feel like the world is ending, translating their fears into unhealthy spending habits,” she said.
A Growing Financial Gap
A global survey conducted by CNBC’s Your Money International Financial Security Survey highlights the challenges younger generations face. Only 36.5% of respondents believe they are financially better off than their parents, while 42.8% feel worse off. These figures reflect a stark decline in intergenerational financial progression.
Baeckstrom emphasized the gravity of the situation: “This generation is likely to be poorer than their parents, a stark reality many are struggling to come to terms with. They feel they’ll never achieve the financial milestones of previous generations.”
The Pressure to Spend
Social pressures and dissatisfaction with work further exacerbate the problem. Daivik Goel, a 25-year-old Silicon Valley entrepreneur, admitted that his extravagant spending on luxury items and tech gadgets stemmed from unhappiness and peer comparisons.
“It was all about escaping,” he said. However, after finding fulfillment in his career, Goel noted a significant reduction in his unnecessary expenses.
For many, spending creates an illusion of control in an unpredictable world. Yet this temporary comfort often comes at the expense of future financial security.
Breaking the Cycle
Experts suggest that understanding one’s relationship with money is crucial to curbing impulsive spending. Baeckstrom likens this relationship to personal attachments, influenced by childhood experiences and family attitudes toward money. “If you have a secure relationship with money, you’re more likely to make rational financial decisions,” she noted.
Samantha Rosenberg, a wealth development strategist, recommends tangible approaches to reduce impulsive spending. Shopping in physical stores, evaluating items in person, and using cash instead of digital payments are some strategies she suggests. “Adding steps to the purchasing process gives people time to reconsider unnecessary expenses,” Rosenberg explained.
Financial literacy also plays a vital role. Stefania Troncoso Fernandez, a 28-year-old Colombian, shared that her lack of financial education led to excessive spending. Her father’s impoverished upbringing discouraged savings, a mindset she is now working to change.
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A Path Forward
While the financial challenges facing Millennials and Gen Z are significant, they are not insurmountable. By addressing “doom spending” and cultivating healthier financial habits, these generations can regain control over their economic futures. This requires a shift in mindset, prioritizing long-term goals over instant gratification.
With the right tools and education, Millennials and Gen Z have the potential to rewrite the narrative and build a more stable financial future.
(Becky)
