Having to save money is nothing new. And that’s not going to change. The only difference is the way we save money, which adjusts with factors like the financial position of the economy, global markets and the cost of living.
For example, millennials are tackling the responsibilities of adulthood later in life than their parents and that’s causing ripple effects.
Firstly, they tend to live at home for longer, travel more and delay the start of a career, and perhaps even starting a family.
This is what Bernard Salt, demographer and The Australian columnist would describe as their “smashed avocado toast” moments.
Salt’s article last week ignited a heated debate about whether millennials have poor saving habits, and whether cost of housing in Australia was to blame for lower mortgage levels amongst that generation.
In the column, Salt observed:
I have seen young people order smashed avocado with crumbled feta on five-grain toasted bread at $22 a pop and more. I can afford to eat this for lunch because I am middle-aged and have raised my family. But how can young people afford to eat like this? Shouldnâ€™t they be economising by eating at home? How often are they eating out? Twenty-two dollars several times a week could go towards a deposit on a house.
While many took his observation literally, he was trying to make a broader point that if you do want to save for a house, or anything in life for that matter, then you have to reduce your spending.
“It’s a metaphor for going without or sacrificing,” Salt told the BBC in the wake of the debate.
“I think that baby boomers in their fifties look back and to their twenties and say ‘Well, when I was saving for a house this is what I would do in order to save up for a deposit.
“It has opened up a legitimate debate about housing affordability in Australia. One of the points that I would make I think Sydney is now a global city and that over the last 30 years the cost of housing has increased to being a par with other global cities”.
Saving money for a home comes down to two things: what you can control and what you can’t.
Yes, housing in Australia, and in particularly in Sydney, is outrageously expensive right now. But that is simply a reality of life. While it fluctuates with different cycles, you can’t change the cost of real estate.
And to that point, if you can’t deal with a small increase in the cost of your mortgage then you’re probably in the wrong house for your income.
So, what can you control?
Ultimately this comes down to personal responsibility and discipline.
Accept that some things in life are expensive but recognise those that aren’t.
Many luxury items, for example, are now cheaper than they have ever been before, including smartphones, flat screen TVs, designer clothing, cable subscriptions, and communication plans.
So save money in the areas where costs are higher, like taking a packed lunch to work, or commute in off-peak times, or even strive for a better paying job.
It’s about adjusting your expectations and managing spending in areas which you have control over.
Of course, it is not going to happen overnight.
Business Insider’s Paul Colgan and David Scutt figured out that if you want to save for a deposit on a median-priced property in Sydney, and you had a smashed avocado habit costing $22 a day, it would take you 19.5 years to save up the 20% deposit.
And based in current price growth, you could expect the house to be four times more expensive by then.
Many millennials may have already given up hope that they will ever be homeowners and therefore see $22 avocado toast for brunch as compensation.
Perhaps one day they’ll inherit an avocado farm from their boomer parents.