Making Cents: What is doom spending?

THERE is a relatively new phenomenon that has gained more traction and attention in recent weeks largely because of what’s happening in the USA and the election of Donald Trump as their new 47th president.

And it's known as doom spending. And doom spending is when someone decides to spend money because they are worried or anxious about a future event that may unfold.

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And examples of being worried about that future event could be having a feeling that you’ll never be able to own your own property or worries about climate change or being worried about never becoming a parent or never finding a partner or worries about how a country might be run or being worried before or after the diagnosis of an illness or worrying about job security and so on.

To overcome these worries some people's coping mechanism is to spend money in the short term because it gives them an instant gratification or enjoyment which takes their mind off what’s really concerning them.

The areas people tend to overspend on are technology, clothes, food, and trips away and in fairness it’s a perfectly natural thing to do. When we get stressed about something we search for a dopamine hit and some people will decide to spend money because it’s a form of therapy for them.

And we can control what we buy and use and wear, but we can’t control what Donald Trump might do or how climate change will play out or how a partner will or won’t behave but we know that a new bag or a new tennis racket or a trip abroad or whatever it is will make us feel, and that feeling we know will be a good one.

Unfortunately the high we get may only last a short while but the ramifications of what we did may last much longer, especially if you are using credit to fund your spending or using your savings.

And what triggered the spending in the first place might be a feeling of never being able to own your own home and having to continue to live with your parents, but now you have another feeling on top of that, that’s making you even more anxious and that could be the debt you’ve maybe begun to accumulate or the guilt you feel at seeing how low your savings have become because of your spending.

It can become a vicious cycle i.e. you feel anxious, so you spend to make yourself feel better and then a short time later you feel even more anxious because you’ve spent money that perhaps you didn’t have, on maybe on something you didn’t even need.

And apparently social media has a lot to blame for our doom spending and I think there are two reasons why this is the case and both are interconnected.

The first I guess is dependent on who you follow and/or what media you are reading and listening to because if the messaging is negative, it could portray things as being worse than they might actually be and if you happen to believe what’s being said without questioning it or without fact-checking it, it could increase your anxiety levels.

And there was a survey carried out in the states recently which revealed that 50% of people who were asked said they are constantly receiving bad news online and it was affecting how they spend their money, so there is data to back this doom spending phenomenon up.

And it makes sense right?

You’re scrolling on your phone and its bad news after bad news and you begin to feel low but then suddenly an influencer or an advert pops up telling you about a special offer on something and immediately your feelings change and now you are one click away from feeling much better than you did a few seconds before, so you proceed to the new site and then minutes later you’re at the checkout.

And people can get sucked into doing this all the time because it’s a quick and easy way to get relief from all the other stresses that’s occupying their mind.

And whether we know it or not and we probably consciously don’t, but when we see something, we decide to buy it in a matter of seconds, 2.5 seconds to be exact.

And the reason we make up our mind so quickly is largely down to how we feel at the time. And this feeling isn’t the act of owning whatever it is we buy, it’s the act of buying that gives us the greatest pleasure. Our brain releases the chemical dopamine, which is associated with feelings of joy and pleasure, and for many people buying things gives them those feelings but as I said already it soon wears off.

We can all probably think of something we thought we couldn’t get quick enough and then a couple of days after we do, it is sitting at home and we’re looking at it and it now means nothing to us.

Anyway, the takeaway from all of this is to maybe take a break from constantly looking at social media posts on your phone because not only might your mental health improve, but it may put an end to needlessly spending money you have or don’t have as well.

And giving social media a rest for a while or at least reducing the time you spend on it might help your finances because your spending may not even fall under the doom spending heading but under the keeping up with the joneses one. Lots of people get into difficulty from mimic spending where you spend money on things that others have, or at least you think they have.

But social media posts only tell you part of the story. You might see friends or influencers wearing certain clothes or jewellery or they may be holidaying in a lovely city eating in a lovely restaurant but maybe they took on debt to fund these posts of theirs and maybe they have absolutely zero in savings, you just don’t know. Which is why you’ve got to be careful if you try to copy these perceived lifestyles.

Okay I want to finish this article by giving advice to people whose spending might be classified as doom spending.
And I’ve given you one suggestion already and that’s to lay off social media for a while or at least dial back the time you spend on it. And also review the sites you visit because if their messaging is the cause of your anxiety then stop reading or listening to them and see how you feel after a few days, and maybe you’ll see that your stress levels have reduced.

I’d say just give it a try and see what happens because I think we forget there is a world outside of what we see on a screen on our phones to be enjoyed.

And you’ve got to replace your social media time with other time and that might be as simple as going for a walk or going to the cinema or taking up a hobby or meeting a friend or volunteering or taking an evening class.

There are lots of things you can do where you don’t have to spend money to make you feel better. Another suggestion I read about that I thought was excellent in preventing you from easily buying things when you’re anxious is by creating what’s referred to as a roadblock, which make impulse purchases more difficult and that’s where you create a barrier to a purchase, and it could be simple things like removing saved credit card in-formation on certain websites or removing them for your phone's wallet.

And what you don’t want to do is go cold turkey from spending impulsively either because it just won’t work. You’ll give up and you’ll start spending at even higher levels than you ever did. So, by all means set aside some money in your budget that you are allowed to spend on whatever it is you want to, but you have to set a limit on the amount, and you can’t go over it and maybe going back to using old fashioned cash for fun purchases might help.

And if there is something that must be paid by a debit or credit card online then maybe you impose a ‘I can’t click and confirm a purchase for 24 hours’ on yourself and maybe the following day you might have a change of heart or maybe you won’t but again try it and see what happens.

Doom spending is happening all over the world and unfortunately, we now know that bad feelings are turning into bad spending habits. And I think one of the big reasons why it’s probably happening here in Ireland is because of people's inability to buy a property of their own. And just to be clear I have zero data to back up that statement. It’s a hunch, that’s all. But I’m sure if you dig a little deeper behind why some people are doom spending, I’d say is because they feel they can’t and perhaps never will be able to afford to buy a house.

Being anxious about your future and where you’ll live and with whom could be the trigger to overspend because you want to numb that stressed feeling for a time and again the problem with this train of thought is that it gives you even less control over your future because if you continued to save rather than stopping and spending your savings, maybe at some stage in the future you will be able to buy. But what’s for sure is that if you have no savings, you almost certainly won’t be able to.

The key I think when those negative thoughts begin to take hold is to first recognize that they are happening and rather than automatically reaching for your debit or credit card is to have other coping strategies that may help take our minds off our worries. And some will work, and others won’t, but I think finding out what works for you is worth exploring because not only will it help our mental health but our financial health also.

Liam Croke is MD of Harmonics Financial Ltd, based in Plassey. He can be contacted at liam@harmonics.ie or www.harmonics.ie