Welcome to the second issue of the Infinitary Connections, the official Substack of the Infinitary Fund. This is a weekly newsletter where Nic and I will be sharing some of our insights across the world of finance, economics, technology, and more. As partners in the Infinitary Fund, we have a unique perspective on the world, the markets, and the shape of things to come.
This week we discuss young money mismanagement and the importance of financial literacy. If you aren’t subscribed, you can subscribe for free below.
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Let’s dive in.
FINANCIAL LITERACY WHERE ART THOU?
“Schools teach exactly what they are intended to teach and they do it well: how to be a good Egyptian and remain in your place in the pyramid.”-John Taylor Gatto, Dumbing Us Down: The Hidden Curriculum of Compulsory Schooling
If you think back to your primary education, what do you remember?
The apple falling on Newton’s head.
George Washington being unable to tell a lie.
How to properly write in cursive.
But what financial information do you recall? What did you learn then that you could have used to truly benefit and change your life? Outside of the one economics course that you probably took your senior year, little to any material covered the requirements of a constantly evolving financial landscape, let alone the economic challenges we will all face.
And the challenges are many.
Rising student debt.
A high cost of living.
Wages that remain stagnant.
An uncertain job market.
To properly navigate these obstacles, is is essential that we have the basics of financial literacy. This includes properly budgeting, credit, and saving plans. Yet our financial literacy is so weak that even the basics are unknown to the vast majority of GenZ and millennials.
According to a PwC survey of 5,500 millennials, all born between the early 1980s and mid-1990s, only 24 percent of respondents demonstrated adequate financial knowledge.
Almost 30 percent of millennials have overdrawn their checking accounts, demonstrating financial fragility, and more than 80 percent have one or more forms of long-term debt
GenZ doesn’t fare much better. According to a survey from Intuit, GenZ would rather talk about anything but finances.
Just as heavily doctored images of beauty on Instagram contribute to insecurities, “filtered finances” are having a massive impact on 18 to 25-year-olds. Increasingly, honest conversations around formerly taboo subjects are the norm. But new data shows that Gen Z would rather talk about politics, parenting struggles, sex, and infertility than debt, their salaries, and bad investments.
The survey also found the following information:
Two-thirds say they know how to make a budget and track their income, but haven’t done it (66%).
Two-thirds know it’s important to invest, but they don’t know how (64%).
63% say they have financial knowledge, but are unsure how to use it.
Nearly half bought cryptocurrency even though they don’t fully understand blockchain (48%).
Two-thirds say they’re not sure they’ll ever have enough money to retire (66%).
Understand that financial literacy isn’t some high concept theory that is only demonstrated in the labs of top colleges around the world. It is imperative information that determines how we live. We should not only understand it but constantly be learning as we work and look to accumulate wealth.
FLEXING INTO THE POORHOUSE
Look on social media and you will see the flex in action. Countless people posting their trips, experiences, belongings, and in most cases…their ignorance. GenZ is even going into debt to jet set and properly flex. This is the height of foolishness.
Going back to the Intuit survey, nearly 3 in 4 Gen Zers say they would rather have a better quality of life than extra money in the bank. In fact, experiences matter more than money to Gen Z, as 66% say they are only interested in finances as a means to support their current interests.
Again, foolishness.
Nic and I want every reader to understand something paramount.
The appearance of wealth means nothing in comparison to the actual possession of it.
Likes, comments, shares, and clicks are nothing more than vanity metrics.
The ultimate flex is having financial literacy.
The ultimate flex is being able to properly budget.
The ultimate flex is being able to withstand the reversal of fortune because you have the liquidity to weather the storm.
The ultimate flex is being able to buy something without having to worry about the consequences.
The ultimate flex is being able to invest in a business opportunity that could generate real wealth for years to come.
The ultimate flex is being able to provide for yourself and even one day, your family.
I know this all too well. I am twenty-eight years old with a home that I own, a wife that I love, and a baby that is the joy of my life. This must be anxiety inducing to my peers who lack proper financial literacy. But I assure you, I am not superhuman. I just understands the basics.
Basics which you can understand as well and that could change your life.
SOME HELPFUL TIPS
We want to provide you with some basic financial literacy tips, courtesy of our friends at NASFAA. These tips cost nothing, but we can promise you that they will pay.
Create a budget: Start by calculating your monthly income and expenses. Use this information to create a budget that works for you.
Track your spending: Keep track of every dollar you spend to help you stick to your budget.
Smart debt: If possible, avoid taking on debt. If you must take on debt, be aware of interest rates, and make sure payments fit into your budget.
Save for emergencies: Set aside some money each month in case of emergencies.
Save for the future: Start saving for retirement as early as possible to give your money time to grow.
Live within your means: Try to live within your means by avoiding unnecessary expenses and making smart purchasing decisions.
Plan for big expenses: Whether it's a down payment on a house or a new car, plan ahead for big expenses by saving up and making informed decisions about financing options.
Be mindful of credit: Behaviors that lead to carrying monthly balances and spending more than you otherwise would with cash or a debit card can lead to more financial problems than if you avoided using credit altogether.
Educate yourself: Learn about personal finance and investing so you can make informed decisions about your money.
Ask for help: Don't be afraid to ask for help from with a financial background in your network.
BEFORE YOU GO
If this helps, please share it. I can promise you that someone in your network needs to read this.
We will see you next week. Thanks for being here.
Mike and Nic.