The 'buy now, pay later' mistakes of cash-strapped young people could contribute to an extended recession (or worse) in the broader economy. profgalloway writes
Illustration: Erik Carter Let’s role-play. It’s March 2021. You’re 23, a year out of college. Your last semester was ruined by the pandemic, but now you’ve got a job with a firm that’s “reinventing commerce” in a loft with reclaimed wood and catered lunches. Bars are open, your friends are coming back to the city, and your bank balance looks good, healthy even: COVID means living cheap, with free cash from the government and no student-loan payments.
Okay, hypothetical over. Schadenfreude may feel especially good when it’s directed at people who still have their hair and can shut down a bar and roll into work with a grin the next morning. But we should all have a little more sympathy for the cash-strapped youth — especially because their BNPL-fueled mistakes could contribute to an extended recession in the broader economy.
My NYU colleague Aswath Damodaran says that the best regulation is life lessons, and getting out over your skis financially may be part of growing up. However, in an educational system where you’re more likely to take yearbook as an elective than personal finance, we are sending lambs to the credit slaughter. When tested on financial concepts, only a quarter of Americans between 23 and 35 demonstrated basic knowledge.
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