Don’t Let ‘Doom Spending’ Ruin Your Holiday Budget
A recent study found that a whopping 96% of Americans are worried about the current economic climate. In particular, high inflation rates, skyrocketing housing prices and an overall rise in the cost of living have got people stressed.
Despite this, consumerism doesn’t appear to be slowing down.
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In fact, holiday spending rose to record highs this past Cyber Week — that is, Thanksgiving Day through Cyber Monday. Black Friday spending rose to $9.8 billion, a 7.5% year-over-year increase. Cyber Monday spending, meanwhile, rose to $12.4 billion, a 9.6% YoY increase.
The phenomenon of increased spending as a way to deal with economic-related concerns is known as “doom spending.” And this year, 27% of consumers have reported doing it.
Unfortunately, doom spending has led to greater financial strain on American consumers and made it harder to enjoy the holidays. The good news is that there are ways to keep this spending habit from ruining your holidays.
These are the effects of doom spending and how to keep it from upsetting your holiday budget.
The Effects of Doom Spending
Doom spending has led to rising debt levels for many American consumers. In fact, 35% of Gen Xers and 38% of millennials reported taking on additional debt in the past six months as a way to cope with their stress. Around a quarter of these individuals said they have over $10,000 in debt, which is even more detrimental in a time of high interest rates.
Along with this, around 42% of consumers reported that their financial situation has gotten worse in the past six months. Many of those surveyed struggle to cover their everyday expenses, like food and housing. Despite this, 27% of these individuals continue to spend more than they used to — thus the increased debt load.
Given the increased spending and debt load, it’s no surprise that doom spending is also hurting Americans’ ability to save money. Around 47% of consumers indicated that their savings balance has decreased over the past six months, while over half of Americans said they have $2,000 or less in their bank account.
Although many Americans are still concerned about the economy in 2024, some have hope that inflation rates will go down or that wages will increase to compensate for the higher cost of living.
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Ways To Stop Doom Spending
Regardless of what happens with the economy in the future, it’s still important to consider the here and now. If doom spending has put a strain on your finances this holiday season, here are some ways to curb impulsive spending and get your budget back on track.
Create a Holiday Budget
“Establishing a budget helps you allocate funds for necessary expenses and prioritize your financial goals,” said Scott Neu, AIF, financial advisor at Reinke Gray Wealth Management. “It provides a clear picture of your financial situation and helps prevent unnecessary spending.”
With a budget, you can see how much money you’ve got coming in and where it’s going every month. This can help you identify areas where you can cut back without majorly affecting your quality of life. It can also open up savings opportunities.
“Stick to your budget like glue,” said Loretta Kilday, Esq., senior attorney and the spokesperson for Debt Consolidation Care. “This helps separate spending on things that are necessary from spending that are not necessary.”
Unsubscribe From Marketing or Promotional Emails
When you receive a lot of marketing or promotional emails, it can be tempting to buy whatever catches your eye. To prevent spending money you don’t have or that could be better spent elsewhere this holiday season, unsubscribe from all but the most essential emails.
“Especially during the holidays, these emails can be excessive and tug at your heartstrings and/or make you feel guilty for not spending more,” said Scott Lieberman, founder of Touchdown Money. “Even though you know you shouldn’t spend the money, you may feel like you should because of these marketing tactics. Unsubscribe away, hit the delete button — anything so you don’t see them.”
Identify Spending Triggers
Knowing your spending habits and triggers can help prevent overspending and keep your finances on track. But you might also need to find alternatives that satisfy your needs.
“Recognize the emotional or situational triggers that lead to impulsive spending,” suggested Neu. “Develop alternative activities or coping mechanisms that don’t involve shopping, such as exercise, hobbies or spending time with friends and family.”
Lieberman added, “Find your triggers. What is making you doom spend? Is it doomscrolling tied with ads? Is it anxiety mixed with thinking ‘buying this will fix everything?’ Determine what motivates you to overspend to help break that pattern. When you feel yourself getting into that mindset, replace shopping with a healthier activity, like walking, meditating or calling a loved one.”
Try To Manage Your Emotions
Learning to manage your emotions can be tricky, especially when you’re feeling stressed or overwhelmed, but that’s okay. Take the time you need to do it, and your wallet — and holiday budget — will thank you.
“It’s no secret that money and emotions go hand in hand. Money can impact our stress levels, mental health and personal relationships,” said Abby Wendel, president of consumer banking business at UMB Bank.
“From instant online purchases and ‘bargain’ shopping in-store, to stumbling onto the car or home of your dreams, we’re constantly provided with opportunities to ‘make ourselves happier’ with purchases,” continued Wendel. “Unfortunately, in many cases, people discover the trade-off that comes with the spending and that happiness is short-lived. It’s important to manage your emotions and channel them into other activities.”
Make a Shopping List
One way to cut down on impulsive spending and get what you want — and need — this holiday season is with a list.
“Sometimes, making a list of things you need to buy can give you that sense of control again. Do you need 25 pounds of dehydrated survival rations, or does your family really just needs eggs, milk and cereal at the store?” said Lieberman. “Buy an extra box of cereal, especially if it’s on sale, to assuage your fears if it helps, but stick to your list. You can review it and get input from your family, too, to make sure you’re all on the right page and not buying excess things due to worry.”
Set a Savings Goal
If you don’t have a savings goal, even a short-term one, it can be harder to curb impulse spending. By prioritizing your savings, you might be able to build a nest egg while still getting things you need this holiday season — and beyond.
“A key part of money management is having a budget set aside for the unknown. Putting your savings first can help when a large, unexpected purchase comes along, so that it doesn’t set you back,” said Wendel. “If you need motivation to do so, consider setting up a direct deposit from your paycheck going straight into your savings so you don’t see the funds as ‘available’ in your checking account.”
Having savings goals can also make it easier to manage your money without letting your emotions guide your spending decisions.
Practice Delayed Gratification
Delayed gratification can also help your overall financial situation and minimize doom spending.
“Implement a rule of waiting before making non-essential purchases,” said Neu. “Give yourself time to consider whether the item is truly needed or if it’s an impulsive desire that may fade over time.”
For example, make yourself wait to put something nonessential in your shopping cart until you’re done with the rest of your list. If you find yourself no longer wanting that item by the time you’re nearing checkout, leave it behind.
Use Cash, Not Cards
When you’ve got credit and debit cards readily available, it’s all too easy to spend money you don’t have. Not only can this hurt your holiday budget, but it can lead to higher credit card balances and expensive interest charges down the road.
“Use cash instead of cards,” said Neu. “Physically using cash makes the act of spending more tangible. When you see the money leaving your wallet, you may become more conscious of your purchases and less likely to overspend.”
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