How Doom Spending Hurts You And How To Avoid It

Doom spending is excessive expenditure of money on luxury or non-essential items and experiences, such as travel, to deal with concerns of stress and anxiety. It is a practice that springs from a sense of hopelessness about life goals.

For example, here in Nigeria, unemployment and hyper inflation are strong factors behind the practice of doom spending, especially among the millennial and GenZ demographics. I have discussed with younger people and have heard them express to me how it seems like they will never be able to afford a car or own a home of their own.

Because of this sense of helplessness and hopelessness, they default to the idea of “chopping life” in the present since the prospects of enjoyment in the future are dim, if not totally nonexistent. And so, they indulge in wild spending.

But doom spending is harmful in the sense that it guarantees that there really is no hope for enjoyment in the future. It is a self-fulfilling prophecy. Let me explain two ways in which doom spending is harmful to you and why you should not practice it.

How Doom spending is harmful to you

Firstly, by indulging in this practice, you spend the little that you have and leave yourself with no chances of taking advantage of any sudden opportunities that may show up for you. Even worse, you have little or no safety net for emergencies.

It doesn’t happen often in life, but every now and then, there comes an opportunity to do something that can change your life – like taking a course or investing in some new product or service with a bright future. But what then happens if you have spent all your money on bags, shoes, a shiny car, or even suya, as someone once adviced in a tweet? Yes, someone said it is better to eat suya with whatever money you have now than to save or invest it. That is a fatalistic approach to life. You rob yourself of the ability to take advantage of any chance opportunities.

Then there is the matter of emergencies. You do not want to be stranded when a medical emergency shows up. It is one good reason to not doom spend.

A friend of mine shared an example with me. There was a period when he was in an accident and suddenly went from “I like my car; it works well. I don’t need another one” to “I have no car”. Suddenly, he needed cash urgently. There are many scenarios in which this happens.

The other reason why doom spending is hurtful to you is that the excessive expenditure on present pleasure means that you are unable to build a financial future for yourself.

I have heard some people turn their noses up at the idea of investing, waving it aside as a waste of time and money. Usually, they tell a story of someone who “put all his money in bank shares” at a period and lost everything. What they are missing is the fact that some putting all their money in only one basket suggests that person is not a shrewd investor, to start with and is not someone they should look to as an example.

At every time that some lost everything in investing, there were others who grew their portfolios in the same period. It is often more a question of knowledge and skill at investing (and yes, there is the element of “time and chance” as well). And this is despite inflation.

Inflation: There is nothing new under the sun

Let me address the subject of inflation and hopefully help you get rid of that sense of hopelessness. Ready?

In my father’s time, a brand new car cost ₦3,000. In my 30s, my wife and I bought a brand new car for ₦1.4 million. That’s a massive jump in prices thanks to decades of inflation. But we bought the car.

As I grew from my teens into adulthood, I saw the prices of cars, houses, and indeed everything else, rise, year after year. Did it look good? Certainly not. Inflation was killing everything but I didn’t let that push me into anxiety and despair.

When I was in secondary school, we used to buy a combo that included a bottle of Coca-Cola, a loaf of bread, and one egg, for ₦1.00. You read that right. One naira. In my 30s and 40s, it went up to as high as ₦300 for that same package. That’s x300 what I once bought it for. Today in 2024, that combo costs about ₦600 to ₦800. It is insane. But don’t give in to hopelessness. You will earn enough to live comfortably.

The summary is this: inflation has been happening before I was born and before you were born and will continue to happen till we all breathe our last. It isn’t new. It is as old as the human race. You are not the first to experience it and your generation will thrive despite inflation, the same way that older generations did. Don’t give in to anxiety and despair.

There is no lasting upside to doom spending

Here is the thing: there is no lasting upside to doom spending. You will feel good for a brief period after the shopping or spending spree. But you will be back to dealing with reality soon after. Like hard drugs, doom spending provides you with a brief high and then leaves you stranded, the euphoria gone, and the money you could have used judiciously to better your lot, also gone.

How to overcome doom spending

Budget. I know. Your take-home pay doesn’t take you home, etc, etc. To use a religious analogy, as we are a deeply religious people, budgeting is like prayer. If things are good, pray. If things are bad, pray.

That’s how budgeting works too: if you are earning a lot of money, budget; if you are earning too little, budget. You cannot have too little or too much to budget.

And you cannot budget too much. Draw up a list of your income and how you want to allocate the money to achieve your goals – go to work, eat, fix this, fix that, etc.

Automate healthy financial habits

Back in the day, if you wanted to save or invest, you had to do it manually. This left room for failure when you are not in the mood or when you are discouraged. Thanks to smartphones and digital technology, you can now automate it all.

For example, you can use an app like CowryWise to automate daily, weekly, or monthly savings and funding of investments. Whether you are asleep, dancing your worries away at an open air lounge, or worshipping at a church or mosque service, any tasks you have automated will be executed on your behalf. This makes it much easier for you to achieve your financial goals.

Embrace recreation

When the average Nigerian hears the word recreation, they are immediately thinking of spending large sums of money on food and drinks at an expensive spot. It is something I have never been able to understand. Why is this? I doubt that there are many Nigerians who have embraced recreation as much as I have, yet I have never once indulged in spending large amounts of money in doing so.

Recreation does not have to involve spending large sums of money or any money at all. I have spent time just taking a walk alone. My friends and I often meet up for a walk in the park – zero expense apart from transportation. I regularly go to dance and would spend on nothing but a bottle of soda and a bottle of water. Sometimes just a little bit more. I would dance all evening, have a blast, and return home feeling terrific about myself.

Do yourself a favour and get rid of the ingrained mindset that you need to spend a lot of money to feel good. There are more than enough activities you can indulge in without splurging. Free yourself from this unhealthy obsession with food and drinks. Focus more on spending time with friends and family and on carrying out activities that you love.

A reminder about balance

Note that I am not preaching a message of not enjoying yourself today because of the future. There is a fine balance that you have to skillfully walk. When you budget, include a reasonable expenditure item for recreation or for something else that you want for yourself. Remember that word reasonable.

It is not reasonable to spend 50% of your annual income on house rent or on a smartphone or on a holiday. You are digging yourself into a ditch. It is unreasonable to spend 20% of your income on recreation.

Also make sure that you have your essentials covered. Your future is part of essentials. Emergencies and opportunities are part of essentials.

It might take some missteps and mistakes to get it right, but if you commit to doing it, you will achieve that balance. Whatever you do, keep away from the temptation to indulge in doom spending. If you don’t, it will hurt you in the long term.

50-30-20: A rough template for budgeting

If you have no idea how to get started, let me help you with a basic template to follow. This is not cast in stone; its purpose is to give you something to start with and fine-tune into a system that helps you arrive at your goals.

Spend 50% of your income on expenses. This includes rent, transportation, feeding, clothes, etc. As you can see, if 50% of your income is going to meeting your essentials, it is unreasonable to be renting an apartment that takes 50% of your income, etc.

30% – If you have debts, use this portion of your income to pay them off. If you are debt-free, use this portion to invest. I recommend that in your early years, you prioritise sorting out your debts and/or investing over present wants, because it is the step that helps you build your net worth so you can enjoy more of your wants in later years.

Spend 20% of your income on your wants. And I suggest that you put this in high-interest savings. The interest rates on bank savings is piss-poor, so look in the direction of other services that offer something better. Again, I recommend CowryWise. For example, you can save this way for that pair of shoes that you want or for that holiday you want to take. This is where your recreation spending is from, too.

50-30-20: Essentials, debt/investment, wants. That’s a good budgeting template.

In closing, I hope that this article has helped you gain some clarity about doom spending and provided you with a way out of it and towards building some comfort, and maybe even wealth, for yourself. It is no easy journey, but it is one you can take and win.

Mister Mobility

Founder of Mobility.com.ng, Mister Mobility, has used and reviewed hundreds of mobile phones since 2001.

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