They Can’t Even: A Generation Avoids Facing Its Finances | Kanebridge News
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They Can’t Even: A Generation Avoids Facing Its Finances

Pandemic whiplash and inflation make managing a budget a challenge for young people

By OYIN ADEDOYIN
Tue, Apr 18, 2023 8:12amGrey Clock 3 min

Many young adults overwhelmed by financial stress cope by ignoring the problem.

Some tune out bank and credit-card balances, lose track of their spending and rack up debt. Average credit-card debt rose 29% to $5,800 in March from a year earlier for millennials and increased 40% to $2,800 for Gen Z, Credit Karma said. Younger people were also more likely to have paid late fees or taken advances from their credit cards, a survey from NerdWallet found.

Psychologists call these behaviours financial avoidance and say it is a typical habit among younger people in any era.

But the pandemic’s economic whiplash followed by high inflation is making such avoidance more common, say economists and financial advisers. The consequences of ignoring bank and credit-card accounts include overspending, damaged credit and deep debt. Millennials in their 30s had the steepest increase in debt of any age group since the pandemic. Avoidance can complicate later milestones, such as buying a home or retiring.

Spending tends to be more satisfying than budgeting or tracking your expenses, “even if cognitively you know it’s not really the healthiest coping choice to engage in,” said Dr. Vaile Wright, a senior director at the American Psychological Association, who studies stress and anxiety.

Avoidance is a common coping mechanism for all forms of anxiety. Someone with social anxiety avoids parties. Someone with a fear of heights may avoid getting on a plane. The APA’s Stress in America 2022 survey found that 83% of adults reported inflation as a source of stress.

James Gay, 22, said he is reckoning with the effects of his financial avoidance since the pandemic.

In 2020, Mr. Gay moved from Mayo, Fla., to Tallahassee to attend Florida State University, sharing a three-bedroom apartment with two friends. With everything closed and his classes completely online, he said he ordered from DoorDash instead of cooking and shopped online to counter his uncertainty and boredom.

“That was my outlet to really enjoy my college experience,” he said.

He developed a particular affinity for Crocs, and now owns about 15 pairs.

“My budgeting plan was very loose,” said Mr. Gay, who was also responsible for his own health insurance, phone bill, utilities and car maintenance. “Sometimes I’d forget about the bills.”

He dipped into his savings to cover rent and utilities. Mr. Gay eventually received a call from his father, who had checked his credit-card account and saw he had used 90% of his $500 limit. After that he changed his ways.

Avoidance seems greatest among Gen Zs and millennials, a survey last month by Credit Karma suggests: 28% in each of those generations said they often or always feel a sense of financial dissociation. That is compared with 4% of baby boomers or older Americans.

“Our culture is really big on overconsumption. We’re constantly spending on things just to self-soothe,” said Alexis Howard, a 28-year-old financial adviser at Mariner Wealth Advisors in Emeryville, Calif.

Ms. Howard noticed this in her own spending behaviour. She ordered clothes and furniture on Amazon during the pandemic, small purchases that would snowball into bigger expenses than she realized. At one point she was spending about $500 a month on online shopping and takeout.

This year, she embarked on a challenge to keep her discretionary spending under $50 monthly. As a financial adviser, she said she knows how easy it can be to lose sight of bigger goals.

“People are really just prioritising happiness, and a lot of folks see happiness in traveling, eating out but simultaneously value larger long term goals like owning a home and retiring with wealth,” Ms. Howard said.

Young adults with lower-wage jobs may avoid budgeting and checking their bills because it makes them feel helpless, said Abigail Sussman, a professor of marketing at the University of Chicago’s Booth School of Business.

“If you feel like you’re really behind, then budgeting also is a reminder of how behind you are,” Prof. Sussman said. “If you set goals that are too high, it can be demotivating.”

It can also help to review what you spent in the past month with a financial buddy, said Jeff Kreisler, head of behavioural science at J.P. Morgan Private Bank. This should be someone who isn’t a romantic partner or family member but whom you trust enough to talk through certain purchases.

“It’s forcing yourself to examine your own decisions,” Mr. Kreisler said.

He recommends setting financial goals with friends. For example, if you are planning on going on vacation with someone, you can both agree to set aside $50 each week for the trip for the next four months, he said. That way, you are both holding each other accountable.



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Preparatory Work for UAE to Oman Hafeet Rail Project Commences at Full Speed

Preparations have begun on the transformative UAE to Oman Hafeet Rail network, revealing significant construction details during a site visit.

Thu, May 16, 2024 3 min

The $3bn Hafeet Rail project between the UAE and Oman will feature 60 bridges and a 2.5km tunnel, making it an “architectural and engineering marvel,” according to CEO Ahmed Al Musawa Al Hashemi.

Hafeet Rail has announced that preparatory work is moving full speed ahead for constructing the transformative railway link between the UAE and Oman. This announcement was made during a site visit attended by key officials, members of the Asyad and Hafeet Rail executive management teams, project contractors, and consultants.

Key Highlights

During the visit, attendees were introduced to the main components of the project, including passenger, repair, and shipping stations, as well as major bridges and tunnel sites.

The Hafeet Rail project is set to play a very important role in enhancing local and regional trade, unlocking new opportunities in the infrastructure, transportation, and logistics sectors, and fostering economic diversification. It will also strengthen bilateral relations between the UAE and Oman.

The project will involve constructing 60 bridges, some reaching heights of up to 34 meters, and tunnels extending 2.5 kilometres. The Hafeet Rail team showcased the latest rail technologies and innovative engineering and architectural solutions designed to navigate the challenging geographical terrain and weather conditions while maintaining high standards of efficiency and safety.

The rail network will boost various industrial sectors and economic activities and significantly impact the tourism industry by facilitating easier and faster travel between the two countries.

Ahmed Al Bulushi, Asyad Group Chief Executive Asset, noted that the project’s rapid progress reflects the commitment of the UAE and Oman to developing and realizing the project’s multifaceted benefits.

Investment and Future Impact

Al Bulushi added that investments in developing local capabilities and expertise in rail-related disciplines over recent years have enabled the project to reach the implementation phase successfully under the leadership of highly efficient and professional national talent.

Hafeet Rail’s CEO Ahmed Al Musawa Al Hashemi emphasized, “The commencement of preparatory works for construction is a testament to the robust synergy between all parties involved in both nations, achieving this milestone in record time. We are confidently laying down the right tracks thanks to the shareholders of Hafeet Rail and the expertise of local companies in Oman and the UAE, alongside international partners.”

During the site visit, the visitors explored some of the key preparatory sites, including Wadi Al Jizi, where a 700-meter-long bridge towering 34 meters will be constructed. This ambitious project is envisioned as an architectural and engineering marvel in a complex geographical landscape.

Future phases will require more collaboration, with a continued focus on quality, safety, and environmental considerations in line with the international industry best practices.

The Hafeet Rail project represents the first-of-its-kind railway network linking two Gulf nations, marking a significant shift in regional goods transportation. This efficient and reliable transportation option will reduce dependence on slower and less sustainable road transport.

Hafeet Rail promises a 40% reduction in shipping costs and a 50% in transit times compared to traditional land transportation methods, as it will be connecting five major ports and several industrial and free zones in both countries.

This shift will reduce reliance on road transport by cars and trucks and promote more sustainable shipping practices. The establishment of the railway network will also create significant opportunities for SMEs in construction, engineering, and logistics support, acting as a catalyst for economic growth and innovation within the domestic economy.

By linking major ports, the Hafeet Rail project will enable local SMEs to import, export, and distribute their products more effectively, enhancing their market reach and global competitiveness.

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