Do you really have to give up your avocado toast? That’s what Aussie millionaire Tim Gurner said when he told off millennials, suggesting that they could afford to buy homes if only they gave up expenses like fancy lattes and avocado toast. His comment, of course did spark, outrage and conversation around affordability of housing and rent compared to previous generations.
But is he right? Millennials seem to be a pretty common punching bag, but research shows they’re an incredibly socially conscious, savvy, and hard-working generation..
And if you want more proof that abstaining from small purchases won’t get you that much closer to buying your first home, a fun specialised mortgage calculator is available, that allows you to see exactly just how much avocado toast you’d have to give up to afford a home. Unless you inhale avocado toast the way you breathe air, you’re likely looking at what will take a few hundred years.
According to the Association of Superannuation Funds of Australia, for individuals and couples who are aged sixty-five in 2017, it will cost an individual $43,695, and a couple $60,063 in the year, to afford a comfortable lifestyle. And what constitutes a comfortable lifestyle? This means having one annual holiday in Australia, owning a reasonable car, regularly eating out at restaurants, having good clothes and being able to afford bottled wine. For a modest retirement, the figures are different, for an individual, their lifestyle will cost $24,270 and $34,911 for couples. A modest retirement means fewer extras, this means, owning an older and less reliable car; infrequent dining out, having reasonable clothes and being able to afford casked wine. As such, it’s a good idea to save up for the kind of lifestyle you wish to maintain. The living costs in Australia are no doubt on the rise, and without an income generated from employment, it’s hard to be able to pay for everything.
The grim reality is, no matter how many avocado toasts you abstain from, you’ll have to do a lot more work in today’s economy to pay for your lifestyle.
Don’t Neglect The Pieces Of Your Financial Puzzle
One piece of your financial puzzle that you can solve now, is to think about the little savings you can make. Let’s say you have a mortgage to pay off, but you also have a habit of buying a lottery ticket at the end of the week, as well buying a can of coke twice a week. Putting off these purchases can actually make a big difference to how much money you can spend instead to pay off your mortgage faster. The point here is, that small savings add up, and that one less latte each week, is money better placed in your savings account.
Nonetheless, it’s pretty easy to get tunnel vision with a particular part of your finances – whether it be paying off your driving ticket, university debt, or reducing your credit card debt. And while it’s definitely important to address those aspects of the personal finance waterfall, make sure you’re looking at all the pieces of the puzzle. Like saving for a retirement and your future. It may seem ages away, but investing now is the best way to have the money you need for the future.
So there you have it. Like Marie Antoinette said, ‘Let them eat avocado toast!’ (Well, we imagine that’s what she would say if she hadn’t had that unfortunate incident with the guillotine).