Apr 8, 2024
Some young consumers can be reckless with their money, but if that behavior spills over into credit it could have devastating long-term consequences.
That’s the concern with Myles, a 23-year-old from Texas who appeared on Caleb Hammer’s YouTube show “Financial Audit.” His finances were apparently in such a mess that Hammer worried he might be heading for bankruptcy.
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“You’re going to die under a bridge broke,” Hammer told his guest.
Like a number of young Americans, bad planning, low financial literacy and misplaced priorities seemed to be jeopardizing this young man’s financial future.
Childish financial decisions
Myles seemed to be making bad decisions in nearly every aspect of his personal finances: income, debt, spending, saving and paying taxes.
His income dropped considerably after he gave up a lucrative job in Pennsylvania. Myles claimed his monthly income working in the home construction industry was between $10,000 to $12,000 a month. His friend convinced him to move to Austin to work on a new project that never materialized. Meanwhile, he depleted his $30,000 emergency savings fund.
At the time of the episode, published Feb. 2024, Myles earned roughly $3,500 a month as a field auditor for financial institutions.
Unfortunately, he picked up some bad spending habits while he was a high-earner. He admits he didn’t have a robust strategy for tackling taxes because he always had excess capital and spent up to $9,000 a month on traveling and partying.
Myles had struggled to shake some of these habits despite a dip in income. Hammer estimated that approximately 30% to 35% of his monthly budget could be better spent. Meanwhile, he owed $5,245 on a credit card at an interest rate of 30%.
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To make matters worse, he refused to work more than 15 hours a week and said he spends six hours a day training in Jiu Jitsu, which he described as, “Almost an addiction at this point.”
Hammer was shocked by these inexplicable financial decisions.
“What are you?! You're not a baby! What are you doing?!” he exclaimed. “You're building up debt. It's not working!”
Thankfully, by the end of the episode, Myles appeared amenable to working more hours.
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Financial literacy crisis
Financial illiteracy cost Americans an estimated average of $1,506 in 2023, according to a survey conducted by the National Financial Educators Council. Around 61% of respondents reported losses of $500 or more, while 22% said they lost $2,500 or more due to gaps in financial knowledge.
Gen Z saw their credit card balances surge 62% between March 2022 and February 2024, according to Fortune, citing data provided by Credit Karma.
Fortunately, there is some hope that this crisis is abating. Around 30% of Gen Z Americans surveyed by Ramsey Solutions in 2022 said they had taken a financial literacy course, higher than any other generation in the survey. Meanwhile, 48% of young Americans say social media has motivated them to adopt better financial habits by partaking in trends such as “loud budgeting” and “no-buy years,” according to a survey commissioned by Credit Karma.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
