How Gen Z and millennials are coping with economic anxiety and ways to break the cycle

In recent years, a concerning trend has emerged among younger generations: 'doom spending.' This phenomenon, particularly prevalent among Gen Z and millennials, reflects a growing sense of economic anxiety and uncertainty about the future. As financial pressures mount and traditional milestones seem increasingly out of reach, many young adults are opting for short-term indulgences over long-term financial security.

Doom spending refers to the tendency to engage in excessive or impulsive buying as a way to cope with feelings of despair about the economy and one's financial future. This behavior is often fueled by a constant barrage of negative news and economic forecasts, creating a sense of impending doom that drives individuals to seek immediate gratification through purchases.

Yva Bckstr, a finance lecturer at King's Business School and former banker, describes this trend as "unhealthy and fatalistic." She notes that individuals engaging in doom spending are "turning their negative emotions into poor financial habits".

The Psychological Roots of Doom Spending

The psychological underpinnings of doom spending are complex and multifaceted. For many young adults, the constant online presence and exposure to negative news create a sense of overwhelm and hopelessness. This emotional state can lead to a "why bother saving?" mentality, pushing individuals towards impulsive purchases as a form of short-term relief.

A survey by Intuit Credit Karma revealed that a staggering 96% of Americans are worried about the economy, with more than 25% resorting to doom spending as a coping mechanism. This data underscores the widespread nature of economic anxiety and its impact on financial behavior.

The Global Nature of the Problem

While doom spending has gained significant attention in the United States, it's important to note that this issue transcends national borders. Economic uncertainty and financial pressures are affecting young adults worldwide, leading to similar patterns of behavior in various countries.

Jane Doe, a 28-year-old publicist from Colombia, shared her experience with doom spending, highlighting how rising inflation and political instability in her country make it difficult to justify saving money.  "I know for sure that food prices are climbing daily, and my family can no longer afford to eat as we did a year ago due to these increasing costs," she explained.

The Generational Wealth Gap

One of the key factors contributing to doom spending is the growing wealth gap between generations. A study by's International Money Financial Survey found that only 36.5% of adults feel they are financially better off than their parents, while 42.8% believe they are worse off.

Bckstr points out that the current generation is the first in a long time that may end up poorer than their parents, fostering a sense of hopelessness about achieving the same level of financial stability. This perception can fuel the doom spending cycle, as young adults may feel that traditional financial goals are out of reach.

The Role of Social Pressure and Job Dissatisfaction

Social pressure and job dissatisfaction can also play significant roles in driving doom spending behavior. ivikel, a 25-year-old startup founder in Silicon Valley, shared his experience of engaging in doom spending while working as a product manager at a biotech firm. He attributed his spending habits to job dissatisfaction and social pressure, stating, "It was all about trying to escape".

Goel's experience highlights how the desire to keep up with peers and compensate for career dissatisfaction can lead to excessive spending on luxury items and the latest gadgets. This behavior is particularly prevalent in high-cost areas like Silicon Valley, where the daunting property market can make traditional financial goals seem unattainable.

Breaking the Cycle: Strategies to Combat Doom Spending

While the factors contributing to doom spending can feel overwhelming, there are practical steps that individuals can take to break the cycle and develop healthier financial habits.

1. Cultivate Financial Literacy

One of the key factors in combating doom spending is improving financial literacy. Many young adults, like Fernández, acknowledge that a lack of financial education contributed to their spending habits. By seeking out resources on personal finance management, budgeting, and investing, individuals can gain the knowledge and confidence needed to make more informed financial decisions.

2. Develop a Healthy Relationship with Money

Bckstr emphasizes the importance of understanding one's relationship with money to combat doom spending. She likens this relationship to interpersonal connections, noting that it develops from childhood experiences and shapes how individuals relate to financial decisions. By exploring and addressing any underlying emotional issues related to money, individuals can develop a more secure and balanced approach to financial management.

3. Make Purchasing More Tangible

Rosenberg,-founder of Bel, a-building platform, suggests making the purchasing process more tangible to counter impulsive spending. She notes that online shopping can exacerbate doom spending tendencies, while shopping in person can help individuals pause and reflect before making a purchase. "The additional steps involved in going to a store, analyzing the item in person, and waiting in line can facilitate more thoughtful purchasing decisions," she explains.

4. Set Up Financial Awareness Tools

Implementing practical tools to increase financial awareness can be highly effective in combating doom spending. Rosenberg recommends setting up mobile banking alerts to create a sense of awareness regarding spending patterns. These reminders can help individuals stay mindful of their financial decisions and avoid falling into impulsive spending habits.

5. Consider a Return to Cash Transactions

In an era of digital payments, the ease of transactions can contribute to mindless spending. Rosenberg proposes a return to cash transactions as a way to create more friction in the spending process. "These methods eliminate the emotional connection to spending and the discomfort of handing over cash," she explains. By reintroducing the physical act of handing over money, individuals may become more conscious of their spending habits.

6. Focus on Long-Term Financial Goals

While doom spending often stems from a sense of hopelessness about the future, focusing on long-term financial goals can help combat this mindset. Bckstr emphasizes that saving and investing money instead of engaging in impulsive purchases can actually increase the likelihood of achieving significant financial milestones, such as homeownership.

7. Address Job Satisfaction and Career Goals

As Goel's experience illustrates, job dissatisfaction can be a significant driver of doom spending. By focusing on career development and seeking out more fulfilling work opportunities, individuals may find that their desire for impulsive purchases naturally decreases. Goel noted that since launching his own startup, his entire mindset has shifted, leading to healthier financial habits.

8. Seek Support and Community

Dealing with economic anxiety and changing ingrained spending habits can be challenging. Seeking support from friends, family, or financial professionals can provide valuable guidance and accountability. Additionally, joining communities or support groups focused on financial wellness can offer encouragement and practical tips for maintaining healthy money habits.

The rise of doom spending among Gen Z and millennials is a complex issue rooted in economic uncertainty, generational wealth gaps, and psychological factors. While the challenges facing young adults are significant, it's important to recognize that there are practical steps individuals can take to break the cycle of doom spending and work towards greater financial security.

By cultivating financial literacy, addressing emotional relationships with money, and implementing practical strategies to increase awareness of spending habits, young adults can develop healthier approaches to personal finance. While the economic landscape may be challenging, focusing on long-term goals and seeking support can help individuals navigate these difficulties and build a more secure financial future.