How often have we "treated ourselves" to retail therapy or a sumptuous meal as a means to ease our stresses of the week? While there is nothing wrong with treating yourself every once in a while, "doom spending" is on a whole other level.

We discuss what is doom spending and its impacts on ones personal finances as well as ways that you can go about regaining control of your money if you have fallen into the trap of doom spending.

Differences between "Splurge-to-Treat-Yourself" (Self-Care) vs "Doom Spending"

What is doom spending?

Doom spending is the excessive spending on luxury things or experiences. It is often explained as being a coping mechanism to deal with anxieties about personal finances and the general economic situation. 

The term doom spending has recently gained traction following a survey conducted by, whereby 27 per cent of Americans admitted to indulging in doom spending to cope with stress.

The repercussions are worrying-nearly one third (32 per cent) of Americans have taken on more debt in the last six months amid increased spending (27 per cent)! 

In Singapore, there has also an increasing appetite for luxury goods, to the point where the luxury goods market in Singapore is projected to generate a revenue of US$4,230.00m and experience an annual growth rate of 3.36 per cent (CAGR 2024-2028).

We also see a similar trend in terms of travel. According to Skyscanner's Travel Trends report for 2024, 87 per cent of Singaporean travellers plan to take as many trips as they did in 2023, if not more, in 2024.  

As for the demographic group most susceptible to doom spending, according to the survey by, Gen Z people and millennials are more likely to doom spend, with 43 per cent of millennials and 35 per cent of Gen Z Americans admitting to it. This trend is on par with the demographics most susceptible to doom spending here in Singapore.

According to Fifth OCBC Financial Wellness Index (November 2023), the proportion of Singaporeans in their 30s holding unsecured debt is the highest among all age groups at 35 per cent, up from 33 per cent in 2022.

They were the only age group (as compared to those in their 20s, 40s, 50s and early 60s) to see an increase. This is consistent with the recent findings of a joint survey by the Institute of Policy Studies (IPS) and CNA, where nearly seven in 10 young Singaporeans have used a "buy now, pay later" (BNPL) plan to finance their purchases, with higher income earners more likely to have done so.

Specifically, Singaporeans between the age of 30- to 34-years-old were the most likely to have used a BNPL plan. It is interesting to note that the justification for doing so by this group of respondents are that with a steady stream of income, making purchases using such schemes is the more financially savvy thing to do with little to no additional financial risk.

Based on the Consumer Credit Index (CCI) Issue 27 published by Credit Bureau Singapore (CBS), Q2 2023 VS Q1 2023, the age group 21-29 has the biggest change in Unsecured Credit Card consumption with +2.53 per cent increase followed by a +10.64 per cent increase for Unsecured Personal Loan.

Based on the same index (CCI Issue 27), the highest new credit facilities applications for Q2 2023 are Credit Card, followed by Overdraft, Real Estate Loan, Motor Vehicle Loan and finally Personal Loan.

The Bureau also noticed a large increase of Overdraft and Personal Loan applications between Q1 2023 and Q2 2023 with 96.75 per cent and 65 per cent increase in applications respectively.

All the above point to increased spending and an increased leveraging on credit facilities in Singapore as Gen Z and millennials try to stretch the dollar further, which is not surprising in the current economy.

Historically, the inflation rate for consumer goods in Singapore has ranged from -1.8 per cent to 22.4 per cent between 1961 and 2022, with an average of 2.6 per cent per year. 

Even at this modest level of inflation, we have seen a 350.53 per cent increase in prices of consumer goods in Singapore from 1961 to 2023. An item you would have to pay S$100 to buy in 1961 would cost you S$450.53 today.

The money we have saved in the bank will have less purchasing power in the future as inflation keeps rising. Our hard-earned money that we have saved tirelessly will not be able to afford us the same luxury in the future as it does now.

This can have a great effect on all your major financial milestones, including saving for the downpayment of your first home (remember inflation affects home prices too) as well as how much you have to build up your retirement nest egg to sustain you in your golden years.

With a high cost of living and a tough labour market, many people think they'll never ever be able to buy property, have kids, or retire with a loaded bank account. With all of these feeling so out of reach, it may feel pointless to even try to save your money if you are just going to fall short of these goals.

This is further aggravated by consumerism. With the increasing availability of BNPL services as well as social media promoting a never ending string of products and encouraging impulse buying, both for instant gratification and over fears that we'll be left behind if we don't buy the next, new thing, doom spending has been on the rise. 

How can you prevent yourself from falling into the doom spending trap?

The first thing to remember is, regardless of what the larger economy looks like right now, do not despair. While the current rate of inflation rates and high property prices may make it feel impossible to ever achieve the financial milestones our parents did, the International Monetary Fund (IMF) contends that the global economy remains resilient.

The last thing that you want to do is doom spend now under the false belief that you will never be able to achieve your financial aspirations just for you to wake years down the road and realise that macro economic conditions have improved but now its your crippling consumer debt that is holding you back.

That being said, that doesn't mean that you have to scrimp and save every last penny you earn. Indulging in a little self care from time to time is not only important to prevent burn out but also a great mindful practise to enjoy the present.

Practising self-care by and treating yourself should be a just that — a little treat — meaning, it should be affordable and within budget. There is a fine line between indulging in retail therapy and practising doom spending.

Depending on the individual's earning capacity and financial situation, this little treat could be a rewards in our daily grind such as a delectable frappuccino after work, a spa treatment or a short getaway vacation.

The exact splurge expense will differ from person to person but the guiding principle should be that this treat will not have an impact on your long term financial goals, or worse still, cause you to go into debt.

The key to not doom spending is drawing the line for yourself between what is a smart splurge and what is an irresponsible expense. Doom spending can create a "financial hole" that is hard to climb out of, and all just for a fleeting mood booster.

Doom spending involves spending money on discretionary items you either don't have or have no space in your budget for. Allowing yourself to spend out of despair over larger economic conditions could result in you falling into high interest credit card debt, or with nest egg for retirement. 

How can you rebuild your finances if you have overspent while doom spending?

The first step to bouncing back after overspending due to doom spending is to recognising the financial setback it has caused you. Only by addressing the problem head on can you really rebuild your finances.

With personal finance content and awareness more readily available in today's digital environment, there is a myriad of information to help you out on this journey.

Next, closely track your expenses and create a budget and try to stay within the limits that you have set for yourself. 

One way you can allocate your budget is using the 50-30-20 rule. This method advocates splitting your income into three categories:

• 50 per cent should be spent on your essential needs;
• 30 per cent should be used for discretionary spending;
• 20 per cent should go towards your savings, investments, and emergency expenses .

Do a reality check before making the purchase — is this a need or a want?

It is important to create the habit of keeping track of how much you've spent each week on these discretionary spending areas.

Discretionary spending is the money you allocate towards those activities that you enjoy, but don't need in order to survive. To control this part of your expenditure, you must make sure that you do not classify your 'wants' as 'needs'.

Regardless of your financial situation, it is always smart to spend within your means. It is highly unadvisable to make non-essential big ticket purchases with future money. Given the current macroeconomic conditions and job market, your next pay check may not be certain.

The next step is to deep dive your currently financial liabilities. When it comes to finances, it's easy to put off thinking about uncomfortable topics like debt. Unfortunately, consumers do not have the luxury of ignoring this issue, as consumer debt can quickly grow out of hand and create financial headaches down the line.

For those who are trying to grapple with mounting credit card debt, you can consider taking out a debt consolidation loan. As the name suggests, a debt consolidation loan consolidates all your unsecured loans.

The major perk of debt consolidation loans is their lower interest rates, which can be as low as 6.95 per cent EIR. This is significantly lower than the interest rates charged on credit cards.

How can doom spending affect retirement planning, and what adjustments should be considered to ensure financial security?

The Fifth OCBC Financial Wellness Index found that 79 per cent of Singaporeans either do not have a retirement plan or are not on track with their retirement plans — an increase from 71 per cent in 2022.

Younger people in their 20s and 30s are further behind in retirement planning with Singaporeans in their 30s holding the most unsecured debt amongst all age groups. This corresponds with the group of people who are most likely to doom spend. 

In order to ensure financial security, the first step is always managing any debt. For secured debts like mortgage loans, look at refinancing to keep interest rates manageable.

ALSO READ: Cash or credit cards: Which is better to use when travelling?

This article was first published in ValueChampion.