Doom Spending Is the New Financial Phenomenon Sweeping America

Welcome to the world of “Doom Spending,” a term closely similar to Doom Scrolling, except Doom Spending pertains to the way we excessively shop despite the economic struggle.

In 2023, the National Retail Federation reported a record-breaking year with over 200 million holiday shoppers and an average spending of over $320 on gifts. But what exactly is Doom Spending, and why is it causing such a stir?

Understanding Doom Spending

As Andre Jikh explained, Doom Spending is a reaction to economic anxiety. It’s when people spend money to feel better at the moment despite being worried about the economy.

Surprisingly, 96% of Americans express concern about the economy, yet a significant portion continues to spend extravagantly. This phenomenon is not just about the act of spending; it’s about the psychology behind it.

The Generational Divide In Spending Habits

Interestingly, Doom Spending is most prevalent among Gen Z and Millennials. A staggering 73% of Gen Z admits they prefer living in the moment over saving money.

This trend is alarming, considering that over half of Americans have less than $2,000 in savings. The personal savings rate has plummeted to a mere 3.8%, painting a bleak picture of financial security for many.

The Rising Cost of the American Dream

The American Dream, once a beacon of hope and opportunity, now carries an astonishing price tag of $3.4 million over a lifetime.

According to Georgetown University research, this staggering amount is nearly double the median lifetime earnings of a typical U.S. worker, which stand at $1.7 million.

The dream, encompassing milestones like marriage, homeownership, and retirement, has become increasingly out of reach as expenses soar, such as:

• Raising Two Children: The cost of raising two children to age 18 is estimated at $576,896.
• Homeownership: The average cost, including lifetime mortgage payments, is about $796,998.
• Education: One year of college for two children costs approximately $42,080.
• Healthcare: Lifetime health insurance costs from ages 26 to 65 amount to $934,752.
• Retirement: Preparing for retirement requires about $715,958.

Out of all the recent generations, the baby boomers have had the best chance at the American Dream.

The Struggle of the Middle-Class

The financial burden of achieving these milestones is particularly challenging for single-earner households, which are more likely to struggle financially than those with two working adults.

The gap between the cost of living and median household income, around $74,450, highlights the growing financial pressures many families face.

Interestingly, certain groups, such as individuals with doctoral or professional degrees like MBAs, who earn between $3.3 million and $3.6 million, can still afford a middle-class life. However, for the majority, the American Dream has become a far more elusive goal, raising questions about the changing nature of success and prosperity in modern America.

The Path to Financial Security

Despite the daunting numbers, there is a silver lining.

If you saved consistently and investing wisely, the American Dream could be within reach. For instance, saving just over $118,000 annually from age 22 to 65 can accumulate to $3.4 million, assuming a 6% annual return adjusted for inflation (but who is really saving $118k annually?).

The key to overcoming financial challenges is envisioning a future where your present-day decisions lead to a fulfilling life. This forward-thinking approach can make daunting tasks like saving for retirement or cutting back on expenses more manageable and meaningful.

Doom Spending is more than just a financial trend; it’s a wake-up call to reevaluate our spending habits and financial goals.

As we navigate economic uncertainties, it’s crucial to balance enjoying the present and preparing for the future.