In November of last year, the crypto trading firm FTX collapsed after its rival declined to buy it and Coindesk reported on it. Not unimportant is that its founder, Sam Bankman-Fried, swindled nearly $4 billion from millions of unsuspecting crypto users, from Tom Brady to your neighbor next door. More important, though, is that Sam Bankman-Fried was a young person, and the majority of those he duped were too.
Although we can definitely blame Sam Bankman-Fried for scamming, no one can blame young people for falling for Sam’s scam. Finance YouTubers praised FTX (they were paid), and Shark Tank host Kevin O’Leary also praised FTX (he was also paid). Many famous people were paid to promote FTX, which should raise some concerns for content creators about the ethics of brand deals and how they should best be handled to maintain a clear conscience. But above all, the FTX disaster is a wake-up call for young people to learn how to manage money and to stop making financial decisions based on trending fintech headlines or advice from YouTubers.
“FTX is Gen Z’s Enron. We have to hope that young people will learn from the experience.”
Not that young people are doing a terrible job with their money; they’re not. Recent polls have Gen Z actually saving a bit more than Millennials, the generation before them. Gen Zers also tend to be more conscious about switching to cheaper options whenever possible, and they enjoy buying secondhand items and reselling unused things. Given that Millennials were such bad role models for financial decision-making, the fact that Gen Z shows any improvements is really quite remarkable.
It’s a tough time to be a young person right now. Life is strange in general, but right now it’s abnormally strange. In fact, according to older people, life was officially easier fifty years ago. Inflation, a pandemic, and a weird housing market are all making prices rise faster than wages, meaning that paying the bills often takes more effort than just getting a full-time job. Because of this wage gap, a record number of young people who are employed have to supplement their 9–5 jobs with secondary incomes. Whether driving for Uber Eats on the weekends, monetizing their social media channels, or learning how to freelance, Gen Z has become known as the generation of side hustles. And I can guarantee that it’s not just because Gen Z loves to work. It’s about maintaining a lifestyle. Side hustles have become a necessity for many young people to provide a consistent lifestyle in the present time when the economy is unstable.
Lifestyle is also the problematic word. Young people are on a never-ending spending spree. Social media photos have skewed the standards of what to buy and consume, and binging glamourous viral TikToks sets the cultural norm for impressionable teens that the influencer lifestyle is the minimum required for social approval. No matter if the influencer was sent their items free instead of actually buying them, or if they resold everything after each raving product review was filmed. Unfortunately, many young people today are only motivated to earn money so that they can buy more. Saving and investing in assets like houses and stocks that go up in value over time is really important for happiness later in life. So too, is investing in children, who generally help financially provide for their retirement-age parents. But homeownership is at an all-time low in many Western countries, and a record number of young Americans say they will never have children.
The future is not all bleak though. In a bizarre way, the many economic problems happening as of late are a fortune to young people — a trove of examples of the benefits of thriftiness and how to navigate the economic pitfalls common in the generations before them. This, coupled with a more connected online business news beat, give young people the opportunity, if they choose to take it, to learn from the publicized mistakes of older entrepreneurs and discern what not to do in business. Mark Zuckerberg’s metaverse failures exude the dangers of mindless trend-following. Elon Musk’s purchase of Twitter is a $40 billion example of impulse buying. And then FTX is Gen Z’s Enron. We have to hope that young people will learn from the experience.