Hey there! Ever heard of “doom spending”? It’s a term that’s been making the rounds lately, especially as people grapple with economic uncertainty. If you’re wondering what it is, why it’s not the best financial strategy, and how to curb this habit, you’re in the right place! I am going to explain what doom spending is, why it is a bad thing, why you should save a bit of your money instead, and how to stop doom spending.
What is Doom Spending?
“Doom spending” is when people start splurging on things they don’t necessarily need because they believe the economy is heading for a downturn. The idea is: “Why save money if it’s just going to lose value?” So, they spend now to get the most out of their money while it still has purchasing power. Some people might think they will never be able to afford a house, so they don’t see the point of saving money for it and spend it on things now.
This might mean buying a new TV, going on an extravagant vacation, or stocking up on goods. It’s a kind of financial YOLO (You Only Live Once) reaction to bad economic news.
Why Doom Spending is a bad idea?
- Depleting Savings: When you spend out of fear, you risk draining your savings. This leaves you vulnerable if things actually get worse. If you spend your money immediately, and you don’t save money, then it is possible you won’t have any money when your washing machine breaks down.
- Impulse Buying: Doom spending often leads to buying things you don’t need. Sure, that new gadget looks cool now, but was it really necessary? Especially nowadays when it is trendy to buy certain things. A lot of people buy stuff they don’t need, just because it is trendy right now. But before you know it, something else is trendy, then you want to buy that as well.
- Long-term Consequences: What happens if the economy stabilizes or improves? You might find yourself without a financial cushion, regretting those impulse buys. You never know what is going to happen in the future. Things change all the time.
- Inflation Pressure: If everyone starts doom spending, it can drive up demand and prices, leading to higher inflation, which ironically can make the situation worse. So if you are spending a lot of money right now, because you think it might be more expensive in the future, then you are right. And that is exactly the opposite of what you want.
Why You Should Save Money Instead?
- Emergency Fund: Having savings means you’re prepared for unexpected expenses or emergencies. Think of it as a financial safety net. So when your washing machine actually breaks down, you have money to fix it or buy a new one. So you don’t have to walk around in dirty clothes.
- Financial Stability: Savings contribute to long-term financial stability. It’s reassuring to know you have funds set aside for future needs. So if you earn a little bit less money, because you have no job you will still have money to buy food.
- Opportunities: With savings, you can take advantage of opportunities that arise, whether it’s a great investment or a chance to pursue further education. You can follow a course if you decide that you want to find a different kind of job that requires certain certifications or degrees.
- Peace of Mind: Knowing you’re financially secure reduces stress and allows you to focus on other important aspects of life. Living from paycheck to paycheck is not great for your mental health, because you’re never sure if you have enough money. And I am talking about people who have the choice to save money. I know there are a lot of people who live from paycheck to paycheck because they don’t have a choice.
Tips to Stop Doom Spending
- Create a Budget: Outline your income and expenses. Stick to this budget to ensure you’re not overspending. A great way to do this is to use cash instead of cards. This way you can’t spend too much.
- Set Financial Goals: Define what you’re saving for—retirement, a home, an emergency fund. Having clear goals can keep you motivated to save.
- Think Before You Buy: Ask yourself if you really need the item or if it’s an impulse purchase. Give yourself time before you actually buy something. For example, when I see something that I sort of want to buy, I put it on my wishlist. Then a month or so later, I ask myself if I still want it. With bigger purchases, I wait even a little bit longer. I want to be sure I really want it or need it. When you are at a store and you want to buy clothes, ask yourself if you really like and how would you wear and combine them with your other clothes.
- Automate Savings: Set up automatic transfers to your savings account. This way, you save without even thinking about it. Make life a little bit easier for yourself.
- Find Free or Cheap Alternatives: Look for entertainment and activities that don’t cost a lot of money. It’s amazing how much fun you can have without breaking the bank. If you want to buy something for your house or want to buy new clothes, you can always check the thrift stores first. I personally love thrift stores and sometimes I find amazing items. I even found a baking tray for maybe 1 euro and when I came home, I checked the brand and it was from an expensive brand.
- Stay Informed: Keep up with economic news, but don’t let it drive your financial decisions. Balanced information helps you make rational choices.
In conclusion, while doom spending might seem like a way to take control during uncertain times, it often leads to more harm than good. By focusing on saving and making smart financial choices, you can ensure stability and peace of mind no matter what the economic landscape looks like. Stay savvy, and keep your financial future bright!
Photo by Annie Spratt on Unsplash