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Twitter engineers are, for the most part, not making nearly as much money as professional football players or lottery winners, but the idea's the same: To be 25 and suddenly making more money than your parents, more money than your friends — more money, really, than you know how to spend — is disorienting, especially in a society that's uncommonly reticent to talk about wealth publicly, and in an industry that's flying high.
"There are a few ways to look at this," said Carl Richards, a Park City, Utah-based financial planner who has worked with many members of the tech world. "The easy one is that we've never been taught: You know, money, sex, politics, and religion. We're not prepared to talk about it." And because the tech world is uncommonly young and uncommonly insular, many of its members have no point of reference for their financial behavior. "My anchor for a backpack is way too high," one Google employee said. "Because I've bought one backpack in my life." (It was more than $200.) Another employee at a small San Francisco startup relayed a story of talking to a (slightly) younger co-worker, fresh out of college and new to the housing market. He was paying nearly $3,000 a month for a studio, simply because he didn't know better. And that naiveté, combined with the new-money ethos of tech, makes for some strange financial decisions: It'd be cheaper to hire a part-time personal assistant than to go through the rigmarole of finding and training a new Exec every time you want your laundry done, and it would be more sustainable to donate to the arts via regular donations rather than one-off impulse philanthropy, but that's not how things work in an economy that's increasingly driven by instant gratification and a culture that's rejecting — either consciously or not — the classical tropes of the upper class.
There's an argument to be made — and it has, many, many times — that there's nothing inherently wrong with spending money you can afford on things you want. But the central challenge of financial planning is balancing the short- and long-terms, and the trouble with getting used to a $200 backpack or a $3,000 apartment is that it doesn't leave much up to chance.
"In the Bay Area particularly, there's no understanding of risk," Richards said. "I've had conversations with people who work at very well-known companies in the Bay Area, and we'll be talking about risk, and they'll say, 'what, you mean the risk that the stock will got from $300 to $250?' No, I mean, that the stock will go from $300 to $0."
That's the thing about peaks: They're hard to see over until you're on the way down. And in tech, which has a tendency toward social insularity and a financial interest in talking up its own growth, the concept of risk, on both an individual and company-wide level, can seem particularly abstract. A surprising number of people I spoke to for this article were living paycheck-to-paycheck, or close to it — regardless of how large that paycheck is. Not a single one expressed any real fear over job security. Some of this is, of course, attributable simply to age, but even in a nation whose unemployment rate currently hovers at around 7 percent, the young guns of Silicon Valley are under the not-incorrect impression that the market values their work, and will continue to do so for the foreseeable future. "I could quit my job tomorrow, or get fired," a programmer at a high-profile company said. "And I know I could get a new job in a week, because my skills are in demand and I have [this company] on my résumé." That's compounded with the tendency of smaller startups to pay their employees partly in stock: Even if you quit your job, you'll be set for the future — provided, at least, that Richards' worst-case $300-to-$0 scenario doesn't play out. "You're sort of banking on options," an employee at a small startup said. "You sort know you'll be okay, which is this upper-middle-class privilege, but it's kind of true."
There's a common financial-planning exercise that asks participants to try to imagine themselves and their lives in twenty, thirty, forty years — where do you want to be living? What do you want your job to be like? According to Richards, some tech employees have particular trouble with it: "There's this problem with not understanding risk because you sort of think it will always be this easy — you're young, you're on top of the world. And that leads into this issue of not being able to imagine your future self." It's human nature and psychological imperative to imagine the future in relation to past experiences — that is, to expect that the relationship between action and effect will be relatively constant no matter what. But that's not necessarily true, especially in an industry where fortunes can fall and rise with the click of a mouse. "You're projecting the recent past into the future indefinitely," Richards said. "And if your recent past has been that everything you touch turns to gold, well ...." If you think about it, it's a near-perfect metaphor for the culture writ large: They literally can't imagine the future. And if the people creating the future — by voting with their (many) dollars, by funding the arts (or not), and by driving local demand, not to mention by creating and managing the products and companies we've all come to rely on so much — can't imagine the future, we're all in trouble.