Canadians are spending money on things they do not need despite financial and economic concerns, with a new NerdWallet Canada study finding the behaviour is widespread across age groups and can carry significant financial consequences.
The research found that 66 per cent of Canadians said they had spent money in the previous six months on something they wanted but did not need, at least partly because concerns about their finances, the economy or the future made enjoying the present feel more important. Forty-five per cent said they had done so more than once.
Among Canadians who reported the behaviour, 75 per cent said the spending had a financial consequence, equivalent to half of all Canadians surveyed.
NerdWallet Canada refers to the behaviour as “doomspending,” describing it as buying things people do not need because the future feels uncertain or saving money seems pointless.
The study found that the most common reason cited by those who spent was getting a lift in mood or a distraction from stress, at 54 per cent. That was followed by wanting something enjoyable to look forward to, at 47 per cent.
Only 21 per cent said an uncertain future influenced their decision to make the purchase.
The spending also extended across a range of everyday categories. Takeout, clothing, personal-care products, electronics, games and hobby-related items were among the purchases most commonly identified by respondents, while travel and concert tickets were also cited, though less frequently.
“Doomspending is easy to picture as a few big splurges. The purchase list tells a more ordinary story: takeout, clothing, personal-care products, electronics, games and hobby-related items. Travel and concert tickets showed up too, but less often. Taken together with the leading motivation — a lift in mood or distraction from stress — the categories suggest that doomspending often involves accessible, immediate comforts,” said Jordan Lavin, a financial expert with NerdWallet Canada.
Two in five respondents who reported doomspending, or 40 per cent, said saving the money instead would not have made a meaningful difference to their financial situation.
The research also found differences in the financial impact across age groups. Among doomspenders aged 35 to 54, 32 per cent said they had taken on or increased debt, compared with 21 per cent overall.
Lavin said the term used to describe the behaviour may not fully capture the motivations reported by consumers.
“The “doomspending” label puts doom and dread at the centre of this behaviour. The motivations put something else there. Worry was the price of admission to the question — but what respondents described next was the appeal of what a purchase could do right away: relief from a bad mood, or something pleasant waiting a few days out.”
The findings suggest that the behaviour is not limited to large discretionary purchases or a particular generation, according to the study.
“Doomspending suggests that a bleak future drives the behaviour. But mood relief, something to anticipate and the sense that saving a small amount would not change much were all more common than the explicitly future-focused response. The effects were not uniform. For some Canadians, doomspending displaced another discretionary purchase; for others, it meant using savings, increasing debt or cutting necessities.”
More from Retail Insider:
