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

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.

First, the good news for office landlords: A post-Labor Day bump nudged return-to-office rates in mid-September to their highest level since the onset of the pandemic.

Now the bad: Office attendance in big cities is still barely half of what it was in 2019, and company get-tough measures are proving largely ineffective at boosting that rate much higher.

Indeed, a number of forces—from the prospect of more Covid-19 cases in the fall to a weakening economy—could push the return rate into reverse, property owners and city officials say.

More than before, chief executives at blue-chip companies are stepping up efforts to fill their workspace. Facebook parent Meta Platforms, Amazon and JPMorgan Chase are among the companies that have recently vowed to get tougher on employees who don’t show up. In August, Meta told employees they could face disciplinary action if they regularly violate new workplace rules.

But these actions haven’t yet moved the national return rate needle much, and a majority of companies remain content to allow employees to work at least part-time remotely despite the tough talk.

Most employees go into offices during the middle of the week, but floors are sparsely populated on Mondays and Fridays. In Chicago, some September days had a return rate of over 66%. But it was below 30% on Fridays. In New York, it ranges from about 25% to 65%, according to Kastle Systems, which tracks security-card swipes.

Overall, the average return rate in the 10 U.S. cities tracked by Kastle Systems matched the recent high of 50.4% of 2019 levels for the week ended Sept. 20, though it slid a little below half the following week.

The disappointing return rates are another blow to office owners who are struggling with vacancy rates near record highs. The national office average vacancy rose to 19.2% last quarter, just below the historical peak of 19.3% in 1991, according to Moody’s Analytics preliminary third-quarter data.

Business leaders in New York, Detroit, Seattle, Atlanta and Houston interviewed by The Wall Street Journal said they have seen only slight improvements in sidewalk activity and attendance in office buildings since Labor Day.

“It feels a little fuller but at the margins,” said Sandy Baruah, chief executive of the Detroit Regional Chamber, a business group.

Lax enforcement of return-to-office rules is one reason employees feel they can still work from home. At a roundtable business discussion in Houston last week, only one of the 12 companies that attended said it would enforce a return-to-office policy in performance reviews.

“It was clearly a minority opinion that the others shook their heads at,” said Kris Larson, chief executive of Central Houston Inc., a group that promotes business in the city and sponsored the meeting.

Making matters worse, business leaders and city officials say they see more forces at work that could slow the return to office than those that could accelerate it.

Covid-19 cases are up and will likely increase further in the fall and winter months. “If we have to go back to distancing and mask protocols, that really breaks the office culture,” said Kathryn Wylde, head of the business group Partnership for New York City.

Many cities are contending with an increase in homelessness and crime. San Francisco, Philadelphia and Washington, D.C., which are struggling with these problems, are among the lowest return-to-office cities in the Kastle System index.

About 90% of members surveyed by the Seattle Metropolitan Chamber of Commerce said that the city couldn’t recover until homelessness and public safety problems were addressed, said Rachel Smith, chief executive. That is taken into account as companies make decisions about returning to the office and how much space they need, she added.

Cuts in government services and transportation are also taking a toll. Wait times for buses run by Houston’s Park & Ride system, one of the most widely used commuter services, have increased partly because of labor shortages, according to Larson of Central Houston.

The commute “is the remaining most significant barrier” to improving return to office, Larson said.

Some landlords say that businesses will have more leverage in enforcing return-to-office mandates if the economy weakens. There are already signs of such a shift in cities that depend heavily on the technology sector, which has been seeing slowing growth and layoffs.

But a full-fledged recession could hurt office returns if it results in widespread layoffs. “Maybe you get some relief in more employees coming back,” said Dylan Burzinski, an analyst with real-estate analytics firm Green Street. “But if there are fewer of those employees, it’s still a net negative for office.”

The sluggish return-to-office rate is leading many city and business leaders to ask the federal government for help. A group from the Great Lakes Metro Chambers Coalition recently met with elected officials in Washington, D.C., lobbying for incentives for businesses that make commitments to U.S. downtowns.

Baruah, from the Detroit chamber, was among the group. He said the chances of such legislation being passed were low. “We might have to reach crisis proportions first,” he said. “But we’re trying to lay the groundwork now.”

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

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

Office owners are struggling with near record-high vacancy rates