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
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.
Martha A. Lavallie
Martha is a journalist with close to a decade of experience in uncovering and reporting on the most compelling stories of our time. Passionate about staying ahead of the curve, she specializes in shedding light on trending topics and captivating global narratives. Her insightful articles have garnered acclaim, making her a trusted voice in today's dynamic media landscape.