With all the political and financial turmoil of the past week, you might've missed the avocado toast controversy. But it's still ripe for discussion.
It started when a 35-year-old Australian millionaire real estate developer said younger people are unable to buy homes because they are spending too much on frivolities such as avocado toast. He wasn't the first to say that, but his version went viral.
Millionaire to millennials: Stop buying avocado toast if you want to buy a home https://t.co/cTPB8aKh5t— TIME (@TIME) May 16, 2017
Millennials are the large echo-boom generation — Generation Y — born between 1982 and 2000, according to the Census Bureau — not all sources agree on the years — and they account for about a quarter of the nation's population. So that's a lot of avocado toast, which is toast with mashed avocado on top.
The bit about frivolous spending offended many millennials, and considering that half of them reportedly spend at least three hours a day on their mobile devices, the online push-back was dramatic. A number of people suggested the millionaire had a head-start because, as a teenager, a grandparent loaned him $34,000. Others just found the avocado toast thing ridiculous.
That was just the start. The New York Times published a fact-checking story about home-buying and avocado toast, reporting that if millennials spent money on food like the Baby Boom generation, they couldn't save up a 20 percent downpayment for a home in a lifetime. GQ published a recipe, under the headline "How to Make Avocado Toast at Home (So You Can Finally Buy a House)."
The Oregonian jumped in with "9 things besides avocado toast keeping millennials from buying homes" (eg: low wages, high debt, home prices), and The Washington Post chimed in with "5 tips for millennials who want to buy a house — and keep their avocado toast" ("Make more money" was one tip).
There are some valid personal finance points to be made here, but most come down to common sense. Of course you can save more money if you spend less, assuming you have discretionary money to either save or spend.
There's always friction between spending and saving, pleasure and security, and immediate vs. delayed gratification. It's a life-long balancing act that financial savvy and good personal finance habits can aid, by making the most of funds available. But that doesn't mean people need a story every week about how much money people can save by giving up $5 coffee drinks, or avocado toast.
Some of the millennial-shaming is driven by frustration in many sectors of the economy that young adults are not buying homes, because that's an important part of the consumer-driven economy. So, why aren't millennials buying homes?
College loan debt, modest incomes and high real estate prices are among the top reasons. For some, there's also conflict between the desire to live in a vibrant urban area and the desire to buy a home one can afford. Others don't want the commitment that comes with homeownership. But it's also worth pointing out that although rents are unpleasantly high, millennials had a front-row seat for the housing meltdown that started in late 2007.
They learned, as we all did, that owning a home is not the slow but sure path to wealth-building that it was long thought to be, but an investment that can potentially blow up due to economic forces beyond one's control, such as the collapse of mortgage-backed securities during the last recession.
Millennials have taken plenty of shots over the years, often portrayed as the generation that grew up on participation trophies, with high expectations for rewards but poor work ethics. Time magazine called them the "Me, me, me generation" in a cover story, describing one of nation's largest-ever generations as "lazy, entitled narcissists who still live with their parents."
The "live with their parents" part, at least, is partly true. Last month the Census Bureau said: "In 2005, the majority of young adults lived independently in their own household, which was the predominant living arrangement in 35 states. A decade later, by 2015, the number of states where the majority of young people lived independently fell to just six."
The Atlantic dubbed millennials "the unluckiest generation" because so many entered the workforce during the worst economic downturn since the Great Depression. Jobs were scarce and wages stagnant or falling, but rents were rising in the wake of the housing crash. Millennials, broadly, delayed marriage, home-buying and child-bearing; more than a third moved back in with their parents.
This meant the largest generation the nation's seen put off what's known to economists as household formation, putting a drag on the economy just as the economy had put a drag on them. Not every sector suffered, of course. Apartment developers and, apparently, avocado toast purveyors reaped some benefits.
In the interest of full disclosure, I'm a member of Generation X, those born after 1964 and once described in The New York Times as the "relatively small, jaded generation that came of age in the post-Watergate, post-Vietnam funk of the 1970s, when horizons seemed limited." I can hardly wait to read about all the things Generation Z is doing wrong, once that generation gets old enough to delay buying homes.
Craft beer wishes and avocado toast dreams!