With news this week that home ownership amongst young people is the lowest it’s been in decades, you might find it interesting (or fit-of-rage-inducing) to know that your wake-up call of smashed avocado on sourdough toast with a perfectly poached egg that has been artfully placed on a plate is apparently the thing that is preventing you from buying a property.
Yep. You heard that right. The archetypal Millennial fruit (and probably an integral part of many new years’ resolutions) is being lauded as an obstruction to financial security.
Not only do the damned things seem to get ripe on the exact day that you have to get into the office early for a meeting (a meeting which will undoubtedly not involve any sort of delicious morsels to munch as Elspeth the early-riser witters on about something that doesn’t do anything to distract you from your famished state – Millennials need to eat every 2.2 hours don’t you know) and are completely inedible the next time you are actually able to contemplate not hitting the snooze button to create your Turner Prize-worthy breakfast (I jest – every Millennial is a morning person with bounding energy who, thanks to social media ramming it down our necks, knows that the key to being successful is to wake up hours before everyone else so you can beat them, obviously), but those already in the money are now telling us that you really can have too much of a good thing.
Earlier this year Australian property developer Tim Gurner did the unthinkable and told off an entire generation for spending too much money on what could be termed ‘lifestyle’ items, including brunches *gasp* and coffee *GASP*.
“When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each. 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 people that own homes today worked very, very hard for it (and) saved every dollar, did everything they could to get up the property investment ladder.”
“But”, I hear you cry, “Millennials love adorning every surface in their rented flats with fresh flowers and the sorts of candles that make every room smell fabulous and con their friends into thinking they have their sh*t together. Brunches are what weekends are for. And god forbid anyone that stands in the way of a 20 or 30-something and their daily trip to [insert name of favourite coffee shop here*]”.
*I’m not being paid to advertise so, in true Millennial style, I won’t promote anything if I don’t get something out of it myself.
Tim does have a point though (an apparent oversight of heart-palpitation-inducing property prices aside).
With beloved bottomless brunches averaging £30-£40 each, spin classes costing enough to put your head in a spin and coffees/ginger bread lattes (you can tell I’m still desperately holding onto that festive feeling even though Spring is in our midst) denting our wallets on such a frequent basis I think it’s fair to say that Millennials really haven’t chosen the cheapest forms of entertainment/morning kick up the backside/hydration. Just thinking about the amount of money you spend on these items alone per year may horrify you.
We can’t deny that there are so many ways that you could put your money to better use; whether that be investing it, saving it in a high-interest account or at least buying something that has a little more longevity than something that ultimately lasts about 20 minutes (although it could last several hours, if you’re like me and somehow forget to consume liquid even when absolutely parched and its approximately five inches from your mouse-wielding hand).
And, let’s be honest, we probably shouldn’t balk at anything said by someone who, at 34, has amassed a $460 million fortune and who Ernst & Young considered their Emerging Australian Entrepreneur of the year (even if, as the article stated, he was given a bit – read AUS$34,000 and determine whether you think that’s a ‘bit’ – of a leg up by his grandfather).
Whilst it’s completely understandable for many Millennials to consider stepping onto the first rung of the property ladder out of their reach and to bemoan the actions (or lack of action) by successive governments, frequent indulgences of the Millennial persuasion will never make the situation better.
But this blog is about being able to save and make money without impacting upon the lifestyle that you want and, with that in mind, I’ve come up with 5 mistakes that you may have been making which, if changed, may allow you to indulge in a few more – to steal Gunner’s terminology – ‘lifestyle’ items:
1. Not getting financially savvy
For some godforsaken reason Pythagoras is on the curriculum and financial know-how isn’t. Now this isn’t a dig at Pythagoras (I’ve actually found it quite useful when ‘home improving’) but it is an observation that our generation have learnt a lot in school that probably isn’t as useful to us now as getting a solid understanding of terminology that gives us the ability to create a future for ourselves where money is never a concern.
That said, there’s still time to learn! It pays (literally) to get a grip of financial jargon to give you the best chance of making clever decisions with your money. I hope that this blog is starting to give you a better idea but Google is your best friend when it comes to educating yourself.
2. Not using credit cards sensibly
A few years ago, I admitted to an journalist of a well-known Radio 4 consumer programme that was interviewing me at work that I had no credit whatsoever. In my early twenties this wasn’t unusual amongst my peer group, nor was it met with an expression of shock (apart from an older colleague sitting close to me who later told me she had 15 credit cards, with a balance on all of them).
Fast forward to now and I do have a credit card. One.
I’ve spoken before about having the correct money mindset and part of this is coming round to the idea that you should only ever spend what you have already earned. That means not using credit cards to make any purchases whatsoever unless you know that you already have the money to be able to pay it off.
I’m not against the idea of credit cards altogether. The complete opposite in fact. Having and using a credit card can ensure your own money is in your account that little bit longer so that it accrues interest, has the potential to boost your credit rating and certain purchases are also doubly protected should something go wrong. But the key to sensible use of credit cards is to ensure that you never have a balance so that no interest accrues. That means paying it off in full – which you’re able to do if you don’t spend money you don’t have.
3. Living beyond your means
At the risk of sounding like a broken record, Millennials have a habit of chasing the proverbial dream of having the entire contents of beautifully decorated, vegan-friendly and Instagram-worthy cake shop and scoffing the whole damned lot.
As lovely as that sounds (apologies to those of you who have given up such glorious sugar-filled delicacies for lent), it’s completely unrealistic and will make you feel fairly sick for several days afterwards.
Metaphors aside; not living within your means can lead to severe debt and the best thing to do is to prevent it happening in the first place.
Budgeting is something that I’ll cover in more detail in future but a really useful exercise for now is to analyse your income and outgoings over the last month. That cab you decided to get on your way home from a night out with the girls just because your heels hurt; the manicure you treated yourself to; your alarmingly large phone bill. Count everything.
Not only should your income be greater than your outgoings, but to stand any chance of saving a deposit you need to be putting a large chunk of that income aside (see the 50/30/20 rule). Instead of spending throughout the month and putting the leftovers into a savings account, treat the amount you want to save as your first outgoing as soon as payday comes around.
4. Not realising the advantage of time
There are so many different points I could make here but what I want to get across is that it’s never too early to make a start on improving your financial future. In fact, the earlier the better!
I’ll be writing in more detail about investing, compound interest and pensions soon but starting to get your ducks (or bucks) in order now rather than in a year’s time really could pay off. Literally.
If you realise that you’ve been making these mistakes then don’t fret, you can do something about it. You’ve already done some of the hard work in recognising that your habits need to change.
All you need to do now is make a plan of action. After brunch.
Avocado on toast for me please.