Pandemic Whiplash Is Causing Young Americans to Ignore Their Bills
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What is the main topic discussed in this episode?
Here's your Money Briefing for Tuesday, May 30th. I'm J.R. Whalen for The Wall Street Journal.
How did pandemic-era spending habits create financial stress for young Americans?
Many young adults dealing with financial stress triggered by the pandemic are taking a dangerous approach to fixing their finances, ignoring the problem.
So I started door dashing and Uber Eats and just eating out quite a bit. And then not only are you paying for the food, but you're paying for the delivery of the food. And I had a lot of bad spending habits during the pandemic. And I just kept swiping, swiping, swiping.
That's 22-year-old Florida resident James Gay. We'll talk to him about his struggle to balance his personal finances. Plus, WSJ reporter Oyen Ededoyen will discuss the psychology behind the problem after the break.
Keeping up with bills and the pressures on your personal finances can be stressful for a lot of people, but young adults are applying a risky solution, avoiding facing their finances altogether. We'll hear from a 22-year-old Florida resident about his experience in a moment, but first, Oyen Adedoyen from the Wall Street Journal Personal Finance Department joins us with more on what drives young people to avoid keeping their finances in order. So, Oyen, how has financial stress risen for young adults in particular in recent years, and what's caused it?
It's really just the economic whiplash of the pandemic. In the early days of the pandemic, we were all indoors, so there wasn't as much temptation to spend outside of the home. And there was a lot of money coming into households from the government to help out those who were unemployed due to the pandemic.
What personal examples show how young adults ignored bills during the pandemic?
And so going from a period of, you know, having so much money and nowhere to really spend it, for lack of a better words, to then, you know, going out into the world into this high inflation economy, it was really difficult for a lot of young people who were starting their first jobs to adjust to. Our culture is really big on overconsumption. So we're constantly spending on things just to self-soothe. And maybe that includes going online and checking and seeing that your friends are going out and doing something or going out and buying something new or having this lavish vacation. And you have fear of missing out. So you spend money that you maybe don't have.
What kind of an effect is it having on their personal finances?
So the effect this has had is really just ignoring your bank and credit card accounts. As those expenses are going up and as money is coming out of your bank account, People kind of have this urge to just not even look for fear of what they're going to find. And so young adults with lower wage jobs might avoid budgeting and even checking bills because it makes them feel helpless if they don't have the finances to work. support their expenses, you know, budgeting might just make you feel even worse. And millennials in their 30s had the steepest increase in debt of any group since the pandemic. And, you know, that's because millennials are often referred to as the sandwich generation. They both had to support young kids living at home while also supporting maybe aging relatives and family members as well.
And so avoidance can really complicate these later milestones that young adults are going through, including buying a home or even saving for retirement.
You spoke to not only financial experts about this, but also psychologists about what causes people to just turn their back on addressing stress like this. What do they tell you?
They told me that avoidance is a common coping mechanism for all forms of anxiety. So someone with social anxiety is going to avoid parties. Someone with a fear of heights might never get on a plane. The APA's Stress in America 2022 survey found that 83% of adults reported inflation as a source of stress. So people are really anxious about their finances right now.
22-year-old Florida resident James Gay faced anxiety after he overspent during the pandemic. And he learned some hard lessons about managing his personal finances.
So the pandemic kind of sent me on a little bit of a spiral, if I'm being quite honest.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:02–0:10
2
How did pandemic-era spending habits create financial stress for young Americans?
0:10–1:46
3
What personal examples show how young adults ignored bills during the pandemic?
1:46–6:28
4
How did economic 'whiplash' and inflation drive young people to avoid their finances?
6:28–8:35
Speakers
3 identifiedMore from WSJ Your Money Briefing
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