9 ms·

What Do Millennials Spend All Their Money On?

• strictnein 9y ago
  Avocado toast
  • alanfalcon 9y ago
    Artisinal avocado toast. (Artisinal? "It’s like stuff you would normally buy, but it costs a lot more. And it has ingredients from places I haven’t even heard of, like Detroit.")
    • OJFord 9y ago
      > And it has ingredients from [artisanal] places I haven’t even heard of, like Detroit. Ah, yes, 'du-twah'.
  • rexpop 9y ago
    Bullshit. > it would cost more than 57,000 avocado toasts to buy a loft in Detroit. But also, while the joke implies that Millennials are stubbornly, consciously making the mistake of living lavishly instead of frugally a) avocado is nutritious (has Big Food has warped the national discourse so much that health is seen as an extravagance?) and b) capitalism encourages buying; it’s highly hypocritical to expect those who earn less to opt out of this model.
  • obtino 9y ago
    To provide some context: this was famously mentioned as the reason why millennials can't afford property in Australia.
  • mmerlin 9y ago
    http://www.smashedavoproperty.com http://www.smashedavoproperty.com
• deleted 9y ago
  [deleted]
• gedy 9y ago
  Rent
• panic 9y ago
  Here's the part of the article where they answer the question in the headline: About $1,000 more on health care. About $1,500 more on pensions and Social Security. About $2,000 more on overall housing (rent, maintenance, utilities, etc.). About $700 more on education.
  • Mao_Zedang 9y ago
    Healthcare, higher cost because of aging boomers. Pension/Social Security, boomers again Housing, caused by over investment by boomers that is encouraged by generous tax incentives by boomers. Seems boomers are to blame.
    • strictnein 9y ago
      Not sure why you're being buried. Part of the ACA was to increase the burden on younger, healthier people.
  • randomdata 9y ago
    > About $700 more on education. More importantly, the vast majority of boomers didn't spend anything. "The overall college enrollment rate for 18- to 24-year-olds increased from 26% in 1980 to 41% in 2012."[1] The lost leverage by having taken on these costs at a young age, by a much larger portion of the population, seems to be directly responsible for the struggles of the millennials. The indebted people with student loans are left with no ability to say no when they feel they are getting a raw deal. [1] https://www.census.gov/content/dam/Census/newsroom/c-span/2014/20140829_cspan_young_adults.pdf https://www.census.gov/content/dam/Census/newsroom/c-span/20...
• markvdb 9y ago
  I would like to see median incomes compared instead of averages. I suspect that the trend indicated in the article would become even more pronounced.
• doubleunplussed 9y ago
  The debate annoys me. Housing has become more expensive and food, including eating out, has become cheaper. Yes, a totally financially responsible person should be minimising eating out in order to save. I do this. I'm on close to average full time wage. Even though I'm saving very carefully, it's still going to take me a lot longer before I own my own home than an average wage earner from the previous generation. Yes, stop buying avocado every day, if you do. But also, Australian housing needs to come down in cost if you don't want people like me to be renting forever. It's not the end of the world if I rent forever, but it is a bit sad. Everyone else got to own a home, why should that be so much harder for me? Not to mention that it takes considerably greater qualifications now to earn an average wage compared to the past. So I'm starting later and with student debt. I don't want to completely absolve myself of agency. I plan on doing the best I can with my situation and I will probably own a home one day. But is it unfair? Yes. There really is no argument. Us modern folk have it easier in many ways, but in terms of home ownership we're not hallucinating that it's harder. Wages aren't going up as fast as house prices, and that's really what it comes down to.
  • ecma 9y ago
    > why should that be so much harder for me? And my friends*. My social group (25-30yo) is generally pretty morbid about the whole situation and most are resolved to wait for some sort of bubble to burst in Australia. Investing in other markets which are stable and easy to enter in the meantime. It's interesting to read an American perspective from outside of the largest cities. I wonder if Australia's more spread out nature and few high density cities skew the problem more here.
    • breeny592 9y ago
      I'd propose a hypothesis that yes it does, for a couple of main reasons: 1. Concentration of job market - a lot of industries only exist (or at least, in a large enough volume) in the larger cities (e.g. financial services, tech). I'd say this is largely coupled to the location of higher education, where there is (relatively) less tertiary education once you leave the major cities. 2. Desirability of location - infrastructure and general "way of life" tends to lead people to wanting a more coastal existence. Australia didn't have the boom of city development in our regional centres, look at towns that are considered large in rural Australia, and they barely compare to even the outer suburbs of the major cities. As much as our deputy Prime Minister would argue "just move to the country", it's not a realistic statement without addressing massive shortcomings in the long term planning of our rural areas.
• wcummings 9y ago
  >In the Reagan era, this age group spent 91 percent of their income. Today's millennials spend only 81 percent of their income. What the what?!
  • doubleunplussed 9y ago
    I guess it means they are saving a greater percentage of their income. Is that so surprising? Not clear if it includes compulsory retirement savings though. In Australia you get 9% of your salary paid into a retirement savings account. If the "income" figure includes things like that then that might explain the higher apparent savings rate.
    • wcummings 9y ago
      I think both numbers are really high.
      • doubleunplussed 9y ago
        Really? I'm a millennial on about average wage and I save about 35 percent of my income. I consider myself quite frugal. My biggest expense is rent, which is about 25 % of my after-tax income. It seems pretty hard to do much better. I could provide a breakdown of my finances, which I track fastidiously. I cook all my own food and bring lunch to work every day. My weekly grocery bill is $70 USD. Those savings rates seem normal to me. I have the added expense of flights every now and again since I'm working in the US but my girlfriend and family are in Australia. It's a temporary arrangement. But without that my savings rate would only be a little bit higher. Maybe 45% instead of 35%.
        • deleted 9y ago
          [deleted]
        • pikzen 9y ago
          >My biggest expense is rent, which is about 25 % of my after-tax income. Yeah, you're not on average wage. HN is awfully biased, and I'm certain almost none of us here have actually lived on minimum to average wage for a long time. Include comment about personal experience under this post.
• rayiner 9y ago
  > “When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” he said. “We’re at a point now where the expectations of younger people are very, very high. They want to eat out every day; they want travel to Europe every year. The modest house where I grew up in the D.C. suburbs (1,150 square feet, three bedrooms, built in 1950s, okay school district) is estimated on Redfin around $600,000.[1] That's a $120,000 down payment. According to the article, millennials spend $3,100 a year eating out. Even if they cut that out entirely, it'd take them decades to save up that down payment. The cost of housing and rent has gotten so out of control in major metro areas that the usual frugality tips don't make much of a dent. What good does cutting out your $4 latte out do (maybe $100 per month), when your rent is $2,500 month for a 1BR? [1] My parents bought it in 1990 for $175,000. People in my dad's line of work certainly don't earn 3.5x more than what they used to back then.
  • brianwawok 9y ago
    To be fair you don't actually need 20% down. It's recommended but hardly the norm. Plenty of people will do 5 to 10% down. Veterans need as little as 3%.
    • dawnerd 9y ago
      And depending on your credit PMI isn't that much per month. It also goes away once you've paid enough to hold 20% equity.
    • AndrewKemendo 9y ago
      As a veteran homeowner I can tell you I paid 0 down on a Fixed rate.
      • tptacek 9y ago
        That used to be very easy to do, but got harder after 2008.
        • AndrewKemendo 9y ago
• tsunamifury 9y ago
  This boils down to the baby boomer generation doing a terrible job at saving for themselves outside housing, and demanding millennials buy them out of their investment. When they don't, they scream "stupid millennial, why don't you just have more money" ... so they can ultimately get that too. They are largely not very desperate, yet still so afraid that even in their later years they horde wealth. In the Bay Area, I feel like rent or buy, I'm just working hard so the older generation can continue living well off our backs. The vast majority of them have made no intelligent investments or savings other than property. And they are now incentivized to make life as miserable as possible for the next generation, so they can live out their remaining years as well as they are accustomed too. My landlord whined about how she makes so little, whilst attempting to hold onto 2.8mm USD in property. I find it hard to swallow... but also inevitable.
  • koolba 9y ago
    The capped real estate taxes (in CA) is a perfect example of this.
  • closeparen 9y ago
    The cohesiveness of existing communities is always going to be at odds with the ability of new communities to form and take hold. It's almost heartwarming that Boomers built lives they love so much, they're willing to go to such lengths to prevent any change. I expect the Boomers would have faced the same thing from their parents and grandparents. What saved them was, rather than pushing inwards to city land already occupied by the powerful, they pushed outwards to sprawl, or into racial minority neighborhoods which didn't, at the time, have a legal mechanism to meaningfully resist. When society saw how destructive this was, it made it much harder to repeat. This is, often, the history of downzoning and the origin of those processes that notify and invite busybodies to stop development. There are moral justifications behind these controls (particularly as they apply to disadvantaged neighborhoods), and to get anything done, we'll have to engage with them. We're completely screwed now because the door is closed to "urban renewal," and sprawl is at its natural limits (under the levels of investment in public transit currently contemplated), and the impetus to live in cities with these problems is more economic necessity than personal taste.
• deleted 9y ago
  [deleted]
• madeofpalk 9y ago
  > It's not because houses are more expensive: the average house costs about a third more than it did in the 80s and early 90s For what it's worth, this whole 'Avocado toast' thing comes from the "Australian Housing Affordability" 'crisis' that's going on at the moment, where housing prices have raised 70% just in the past 5 years alone.
  • lobster_johnson 9y ago
    What's the cause of the increase?
    • Mao_Zedang 9y ago
      - pensions being invested in real estate - overseas investment - generous tax incentives where you can reduce your taxable income to zero, "negative gearing"
    • kolokolo 9y ago
      Inorganic population growth by immigration. There are heaps of millionaires in China and the banks are giving them quite some leverage.
• k__ 9y ago
  I save most of it. Stock market etc.
• bfrog 9y ago
  Rent and student loans
• JusticeJuice 9y ago
  I'm a millennial, who's just leaving university and coming into the job market. I was lucky enough to pick a degree with actual job prospects, so I'm earning a decent wage. However, there is no chance of me buying property in my country anytime soon (probably for at least a decade, if I'm lucky). At the current rate I could max save at, I'll only come within striking range in 50 years.
  • virmundi 9y ago
    I have no idea where your native land is, but you could go against mainstream with a house boat. I'm trying to get a SV refugee camp here in North Florida around housing in the St Johns. In Florida if you are a resident, you can park your boat on the river. So if we can co-op a boat community on the river complete with WiFi broad band, I think we could all live happily ever after. You can get a liveable boat with out a shower, used without a shower for 7k US. Think microhouse with Manatees in the winter. If you'd like to live in Palatka FL contact me: virmundi at gmail.com.
    • icantdrive55 9y ago
      I wanted to do that in the Bay Area, and it's not easy. Sausalito goes out of there way to harass anchorouts. Actually, Sausalito is ticket/fee happy. It's just not right. A friend of mine had to pay a $400 parking fee. The person above me has a great idea. I think we have lost the housing war. We need to stop these little municipalities from enacting laws that force us to rent overpriced rooms. Living on the water should be a right. (Yes--you need to contain wastes, etc.). America has just made everything against the law. It's gotten rediculious.
  • closeparen 9y ago
    To be fair, buying fresh out of college has never been that realistic. The more interesting question to me is, if I can maintain my current spending under future raises (and shovel the difference into an investment account), will I come within striking range in a decade or so? The answer is, I could come within striking range of a 20% down-payment on current prices, but once I factor in 1) the 10-15%/year price increase every year, and 2) the 10-15%/year rent increase chipping away at what I can save, it's hopeless. I'm kind of thinking about investing (part of) this fund in REITs, so that I have exposure to the same growth I'm trying to compete with. However, this precludes the only truly winning scenario (I have a lot of cash available during a housing market crash).
• Mao_Zedang 9y ago
  Real estate in Australia is a giant house of cards, that appears to be slowly reaching its peak. Eventually something will give. - higher interest rates - change in government taxation - inability for people to pay higher rents
• nathanvanfleet 9y ago
  It is really rather funny moving to the bay area and making a very high salary that still comes nothing near the kind of money you'd ever need to buy a house. People are buying houses cash and bidding over asking and it would still take me over a decade just to make the 20% downpayment. It makes me really not sweat 10-20$ spent on something I might enjoy, like a coffee or ice cream.
  • sjg007 9y ago
    Yeah it use to be IPO and buy a house.. harder nowadays.
• p0nce 9y ago
  So, it seems millenials are quite frugal after all, and previous generations aren't as much.
• jimjimjim 9y ago
  lotta knee-jerk boomer hate responses so far. I'm not a boomer. I have recently bought a house and will be a slave to the bank for decades. But: I don't live in a major tech city = house prices are cheaper. I rented for years and years slowly building a deposit before looking for a house. I had ZERO expectation of buying a house on leaving university. Why would I expect to do that? I didn't and don't buy retail coffee every day. (in fact i don't buy retail anything everyday day). In my twenties computer games used to cost approx the same as aaa console games, none of this freemium/app pricing schemes also DVDs/CDs were full priced, no free streaming. And because I couldn't afford more stuff the answer was to just buy less. slowly slowly.
  • usmeteora 9y ago
    yeh but you also just said youve resigned to being a slave, and I'm not going to bash our generation for wanting to imagine a world where we are not slaves to a bank forever.
    • tluyben2 9y ago
      I chose to live in a village in another country than my native country with one of the reasons being I could pay my house cash. This world is already there if you are more flexible about your location. Luckily I do not generally like cities at all and never did.
    • jimjimjim 9y ago
      well, i want to imagine a world where i've got a solid gold toilet but it ain't gonna happen.
• nihonde 9y ago
  Every time I mention to people that a home is almost always a depreciating asset in Japan, someone always thinks that's stupid and inefficient and obviously a bad thing. But if your housing is an appreciating asset then so is almost everyone else's. That means your primary cost of living is going up, and your wages (or return on other assets) better keep up with that rate of increase. That's a lot of pressure on new entrants, especially in a country where family has an ever-diminishing willingness (and ability) to take care of its own.
• deleted 9y ago
  [deleted]