Boomers bashing millennials about their avocado toast craze became a meme. And the reality is, spending massive money on simple food is not a great habit to build wealth.
“When I was trying to buy my first home, I wasn't buying smashed avocado for $19 and four coffees at $4 each,” Tim Gurner, an Australian property mogul told 60 Minutes.
“We're at a point now where the expectations of younger people are very, very high,” Gruner said. “They want to eat out every day, they want to travel to Europe every year. The people that own homes today worked very, very hard for it, saved every dollar, did everything they could to get up the property investment ladder.”
Generational Warfare
Tim's words have ignited a backlash from millennials who are offended someone would attack their eating desires. Eating expensive food is a sacred right! The nerve of this guy. Next thing you know, he's going to dissuade people from buying $300 designer jeans when they already have a credit card balance.
As fate would have it, I just had a $10 bowl of guacamole the other day at Tacoliscious in the Marina district, after spending time doing some ceiling patch work on my rental house. All around me sat a bunch of young and fabulous looking folks who were enjoying the 78 degree San Francisco sunshine. Oh, how I wish I didn't have a house to do work on. I could have gone straight to brunch!
Bottom line: If you're a millennial who wants to spend $25 on the finest breakfast consisting of avocado toast, bacon and crumbled feta cheese, go for it! You don't need to save for a house because you're either living with your parents or your parents will eventually buy you one when they can't stand you any longer. And if they don't buy you anything, they'll at least leave you their house when they die.
Millennial Avocado Toast Analysis
I know some of you think I'm being a bit flippant. But, living in NYC and SF over the past 18 years, I've seen with my own eyes how so many parents are supporting their adult children. Heck, my roommate one year out of college left me because his parents bought him a $260,000 one bedroom condo in Manhattan that's now worth over $750,000.
Let me share with you some recent encounters and some statistics as to why it's OK for the majority of you to spend aggressively while young and not save for my favorite wealth building asset class.
Neighbor One Millennial Avocado Toast
Brendan is 27 years old and lives in the basement of his parent's house across the street from me. He's a nice guy who loves to go snowboarding every chance he can get. He told me he went up for a total of 45 days this winter because Tahoe had the most snow in decades. Right on brother!
Just last week he, his girlfriend, and two friends got back from a three hour SF Giants game that started at 1:05pm. I was doing some final staining on my planter boxes when they pulled up.
They were so happy to enjoy a great weekday victory while his parents were at work. Brendan has a lot of free time because he bartends part-time. With his living expenses close to zero, he doesn't need to work a lot.
Neighbor Two Millennial Avocado Toast
Jason, the then 22-year-old who was living at home attending community college three years ago when I bought my current house is back to living at home after transferring to and graduating from UC Davis. When I asked his mother what he was doing when she sneakily entered my property to get a closer look at my new landscaping work, she said, “random things,” implying he was still looking for full-time work.
Meanwhile, Jason has invited two of his friends to live with him in his parent's house. His parents no longer live in the house as they have another house up north. They just check-in every couple of weeks or so.
One of Jason's housemates just bought a new Harley Davidson for about $10,000. He works at the grocery store down the hill. Jason himself has a racing bike and a sports car. Housemate #2, who works at Chipotle, drives a Ford Flex. Why ride the bus and get a full-time job when living costs are completely subsidized?
Neighbors Three, Four, Five, Six, Seven: All either live for free or inherited their houses. They're all between 35 – 60 and are really nice folks who don't have full-time jobs. For more details, see: A Massive Generational Wealth Transfer Is Why Everything Will Be OK
House buying competition:
“What percentage of first time homebuyers get help from their parents in the form of a downpayment or total payment?” is a question I've asked about 25 real estate agents so far this year. Their answers range from 30% – 70%. Every agent said that parental help is extremely common. The media likes to demonize foreign buyers for making real estate more expensive for locals. But it's really parents helping their children who make the bigger impact.
For example, the winning bid for the house that I had put an all cash offer for in April was from parents buying the house for their son. He graduated from college this year and is starting at Airbnb. I'm guessing the final sales price is $1.82M, or $321K over asking. Next time you go to an open house, ask the listing agent my same question.
Inheritance expectations:
Empower surveyed over 100,000 millennials who use their free app. They found the median amount a millennial expects to inherit is over $1,000,000 (!).
Although the inheritance may not come until later in life, if you think you have at least $1,000,000 coming to you, you're not worrying about spending $20 bucks on glorious avocado toast. Instead, you'll probably want a $12 mimosa to go along with it! Entitlement mentality can't help grow as a result.
Who can blame a millennial for quitting a job only after a couple years if it's not the perfect fit? No longer do young adults have to “take it and like it” as we older folks did when paying our dues. If there isn't constant recognition from management and a clear accelerated career path, then it's sayonara suckers.
See: No Wonder Why Millennials Don't Give A Damn About Money!
Low housing expenses:
A recent FS survey with over 3,000 respondents showed that 66% of you spend less than 20% of your gross income on housing. That's fantastic. Meanwhile, a good 4% of you spend 0% of your gross income on housing because you either have financial support or rent out a portion of your house.
With 70% of you doing so well, you might as well splurge on a $180 side of beluga caviar to top off your $12 mimosa and $20 avocado toast. Housing cost is clearly not as big of a concern as the mass media makes it out to be.
Loading ...See: Housing Expense Guideline For Financial Independence
Live It Up Early Or Late, It's All The Same
After the age of 34, I started living the millennial dream life because I had left Corporate America. After a little bit of writing in the morning, I'd play tennis for a couple hours and then have a boozy brunch with other unemployed friends.
While I didn't order $20 avocado toast, I did increase my spending on $25 chirashi bowls (assorted sashimi over rice). Afterwards, I'd give in to food coma and take an hour nap on my couch. Life was wonderful!
I got to know many 20-something and early 30-something year old folks who didn't work full-time. They seemed to love life and all lived at home with their parents. From the millennials with full-time jobs who I met while consulting at some of the fintech firms, I know of several who had parental assistance with downpayments on new property. Given that was back in 2013-2014, they're now much wealthier.
Rational Millennials Eating Avocado Toast
Millennials are being completely rational by living their ideal lifestyles before they turn 40 because they CAN. With the internet, anybody can make money online or be a rockstar contractor.
With wealthy parental safety nets, millennials are taking more risks by switching careers at the fastest pace in history. They're also starting companies, taking more time off to travel, and spending more extravagantly.
Some are just plain envious of the millennial avocado toast lifestyle, especially those who busted their butts to get to a level which millennials are already enjoying.
I wish my parents had bought me a condo when I first moved to NYC in 1999. I wish my parents had bought me a house when I moved to San Francisco in 2001. If they did, I'd be so rich I could have turned into one of those Instagram playboys by age 30!
Though I wasn't gifted any property, today I do have four properties which I can gift my children so they can live lives of leisure. Maybe they'll even learn some responsibility as property managers and share some of the rental income with mom and dad. Damn, I wish I were my children!
Final Point Of Millennial Avocado Toast Eaters
Some of you might be wondering what about the importance of pride and independence. By giving adult children everything, we may rob them of achieving self-actualization. While yes, it's extremely gratifying to achieve success on one's own. Don't be so sure that millennials aren't living incredibly satisfying lives.
Here's one millennial's response that sums things up perfectly:
“Sam, I didn't have a choice when I was born or to whom I was born to. There are so many bad people in the world. If I don't harm others, I feel I'm already way ahead of the game.“
Any millennials out there want to share why they are offended by some random person in Australia who says you shouldn't spend so much on avocados? Given there's such a massive wealth transfer underway, isn't it completely rational to live a life of leisure if you don't have to work as hard to build your own wealth? Are older people simply jealous of the millennial lifestyle?
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Avocados aren’t “expensive food”. Suggesting lower classes shouldn’t expect to afford healthy food is textbook class warfare. I would love to know where all of these kids who supposedly buy 20 dollar breakfasts and travel the world come from; seems like a made up fairy tail to me.
Oh yeah by the way, with todays insanely inflated economy, avocados cost exactly one dollar. Maybe it’s time to talk about the truth of exploitation in this country, instead of suggesting that our children shouldn’t be able to afford calorie-dense healthy food for one dollar.
If you’re a millennial who wants to spend $25 on the finest breakfast consisting of avocado toast, bacon and crumbled feta cheese, go for it! You don’t need to save for a house because you’re either living with your parents or your parents will eventually buy you one when they can’t stand you any longer.
Long term, everything is rational. We should feel free to do what we want.
The media is profiting off our economic demise. It’s okay MSNBC, CNN, Fox, do whatever floats your ⛴
If you would like some more ammo for Millennial-bashing, I can send you some some great stuff I saw today. Some article about how not having any isn’t their fault and NOT the result of poor money management, but actually because of wages being suppressed. Or something.
I think a lot of people who get offended are the older Millenials, born in like ’81, who resent being lumped in with the millennials from say, 1993. Those 12 years make a big difference. It’s really not fair to lump them all in together.
Myself, as a 23 year old who lives at home…unemployed…couldn’t care less. ;)
Austin, I agree with your comment about stagnant wages. And I disagree with the earlier commenter who blamed people’s lack of work ethic for not being able to get ahead, so to speak. This country is facing a future of increasing automation and most industries, including healthcare, are not immune. Also not everyone is blessed with the same education level, has access to good school districts or has fallback money or a family to rely upon if their entrepreneurial idea fails.
https://www.weforum.org/agenda/2017/01/wages-have-fallen-43-for-millennials-no-wonder-they-ve-lost-hope/
There are different camps of Millennials as the large gap between the rich and poor continues to increase at a rapid rate and you could say avocado toasts and mimosa brunches are reflective of that. There are those who are eating avocado toast and drinking mimosas because of YOLO, those who can’t afford it and do it anyway to act in denial, and those who can barely afford to eat it at home without government aid.
It would almost be amusing to see a 100% estate tax come to pass. The avocado eating would dry up quick.
People with 500k to 1 million to leave would eat it on the chin. Those with 10 million plus would make out just fine. It’s unfortunate that people vote against their financial interests but that’s just what it would be.
When you have liquid millions you can kick down gobs of cash to your family along the way. You can have the nice bankers watching over your hoard write up a tidy insurance policy and take 20% to pass on the rest as a tax free insurance payout instead of paying 50% to taxes.
When you have 1 or 2 million net worth you are living in/on that. Just something for some of the responders above to chew on.
As to the article I think you make a good point but your frustration is showing, You can lead a horse to water….
I’m trying to be more zen myself. If people want to shoot themselves in the foot then so be it, if they have the means to spend their parents money then good for them.
I’m a Millenial born in ’89. Went to school at a public university – albeit no scholarship because I was a screw up in high school – and graduated in economics. Couldn’t find a job in finance (save for a few trader analyst positions up in Chicago), and the only interviews I could get business related were $9-12/hr.
I’m now a Realtor, finance blogger, and 911 dispatcher. Why? Because Florida has terrible wages to coincide with a high cost of living. In fact, the area I live the median house price is $243,000 and the mean is $234,000. Rent is somewhere between $1200-1800. That’s not feasible to try and buy a home when you’re making $30,000 or less.
I know I wasn’t the target of Gurner’s speech, but I was perturbed by the insensitivity. That somehow Millenials only have themselves to blame when they can’t afford a home. There are plenty of graphs to show that the economic development of the middle class has not paced with the rest of the economy. Not all who hustle will win the race. That’s kinda the basis of income stratification.
Sam, I am a huge fan of this site. Hell, I’ve even guest posted on this site. But Sam, no. The Millennial bashing. Just…no.
The generational bashing needs to stop, and this is coming from a guy who recently published an article asking which generation produces the most entitled customers. Not just here, but all throughout the Internet. Depicting Millennials as avocado-eating man-children mooching off their parents instead of working is like depicting Asians as squinty eyed math prodigies who are human driving hazards. Stereotypes aren’t cool, even if you throw out numbers to “back it up”.
Honestly, Sam, this sort of article is beneath you. It’s the sort of thing I’d expect from MY blog, where there’s more off-the-cuff rants than a Donald Trump rally.
Sure, many Millennials live at home with their parents because they are lazy, irresponsible, and unwilling to work (just like my 50-something year old neighbor across the street who still lives with HIS parents for that very reason). But many of also are suffering in a country with rising home prices, stagnant wages, worthless degrees, and skyrocketing debt. My dad went to college for $50/year. No scholarship; that was just what it cost! I have customers who bought their modest “regular” homes around the time I was born for <$50,000 and now have them valued at over a million. Times are different, and I wonder how many Millennials would still be living at home with their parents if the economy of their parents still existed.
And in our service economy–where we all serve each other, move money around, and push papers through/around government bureaucracies rather than creating anything–I only see this becoming worse and worse. That's what happens when the manufacturing jobs and automotive jobs move overseas while the compliance/regulatory fields are growing.
And yeah, I know that just means the Millennials should hustle more, just like you did. And I don't even disagree with you, Sam. That's what I'm doing, trying to find ANOTHER second job on top of trying to find a new full time job. But don't forget that the vast majority of people aren't you. I think you have whatever the reverse of the Dunnong-Kreuger Effect would be called; sometimes you seem to think that just because YOU created a successful online media company while working as an investment banker doesn't mean it's something everyone can do, like it's about as labor intensive as ordering a burger or something. And this means nothing about the "lazy Millennials" against the "hardworking older generations"; THEY wouldn't have had the skill or work ethic to do what you do either.
Yes, I know I just spent the last paragraph essentially saying "Not everyone is as awesome as you, Sam".
Anyhoo, rant over. Keep up the great work over here, Sam. Just leave the Millennial bashing articles out of your itinerary. I'm sure they bring page views, but so does everything else you write. And unlike everything else you write, articles attacking Millennials or any other generation of people bring nothing of value to your readers, the greater national discussion, or Financial Samurai itself.
Like I said, this is beneath you.
Sincerely,
ARB–Angry Retail Banker
ARB – Where was the attack? Did you miss the conclusion where I write that Milllennials who spend a lot on the finer things are acting completely rational?
Did you miss this beginning paragraph?
Bottom line: If you’re a millennial who wants to spend $25 on the finest breakfast consisting of avocados, bacon and crumbled feta cheese, go for it! You don’t need to save for a house because you’re either living with your parents or your parents will eventually buy you one when they can’t stand you any longer. And if they don’t buy you anything, they’ll at least leave you their house when they die.
Not sure how you went from these conclusions to racism against Asians. What?
I wasn’t accusing you of racism. I was comparing stereotyping against stereotyping. And I don’t think that “Millennials are being rational” was the intended conclusion of this article, or else you hid it very well. This was another “Millennials are mooching off of mommy and daddy” article, and it’s gotten really old really fast.
Of course you aren’t. I’m accusing you of being racist.
I even bolded “completely rational” at the end of the article. Will look into more intense bolding to emphasis the point even more. I think you using the words “Asians as squinty eyed math prodigies who are human driving hazards” is way more offensive than saying Millennials are free to spend what they will because of a massive generational wealth transfer.
If you don’t, then you’re going to have a difficult time building good relationships that will help you get ahead.
Related: Some Insights Into Why Asians Have The Highest Median Income
Sam, I’m aware of the bolded words. But I still don’t think that was the point you were trying to make. As you mentioned in the article, you came off as quite flippant. You tend to do so when talking about Millennials. I tend not to read those articles, but you lured me in with the promise of that delicious-sounding Ava ado toast I’ve never had.
And of course for someone to unironically say that about any ethnicity would be way more offensive. But joyfully and gleefully waving off an entire generation of people as worthless basement dwelling moochers isn’t particularly great either. And THAT’S what I get from this article and all your other Millennial articles. They’ve got a pretty hard to ignore anti-Millennial tone to them.
Sorry, I’m not trying to attack you here, and you know I’m a big fan of your blog. But your best sides–which show in literally every single other piece of content you write–do not show in these articles.
Maybe it’s unintentional. Maybe your conclusion was meant to be taken at face value and I’m reading too much into it, in which case I apologize. But in that case, Sam, I urge you to go back and read a lot of these articles again in which you talk about the failures of the Millennial generation (supposedly sitting around, mooching off the parents, unwilling to get a job, and waiting for those huge inheritances to buy a lifetime supply of avocado toast all apparently being a part of the “Millennial lifestyle”). They come off as spiteful and cruel sometimes, and unlike your other work, they don’t add anything of value. It’s why I keep saying that that’s beneath you. Leave the Millennial bashing to those who DON’T provide valuable financial advice to a mlion people monthly.
I don’t think this wod annoy me so much of I didn’t like your blog. Normally I just eye roll the anti-Millennial content on the web.
Of course, maybe I’m just grumpy that I’m not getting my massive inheritance. Seriously, not a single person I’ve ever met is expecting any sort of inheritance. What the HFIL!?
Sincerely,
ARB–Angry Retail Banker
I really am impressed/surprised with how much you have let this article get to you. What are some of the things in your life that are really bothering you that have caused you to feel so offended? I find it very helpful to talk things out and you’re free to use my site to vent as much as you want. Just keep the racist language to a minimum please.
Sam, while I completely disagree with ARB’s comments, I would strongly encourage you NOT to see his comparison of Asians as racist. He did purposely come up with a super offensive comparison, but he clearly said “Stereotypes aren’t cool, even if you throw out numbers to “back it up”.
>>But many of also are suffering in a country with rising home prices, stagnant wages, worthless degrees, and skyrocketing debt.
I would just like to say, this is Millennial speak at it’s finest. ARB, you are still making excuses as to why people can’t get ahead. It’s simply not true. It’s not a “right” to be super successful in this world. If a person in the US makes the most basic of common sense choices like living with roomates and not having children until you can afford it, you can live comfortably in a lot of states just making minimum wage.
NO ONE born in the US should bit** and moan about anything. Born super poor in OTHER countries, yes, you can complain. Here in the US, the people living under bridges STILL have it better than poor people in other countries. Poor people in other countries can’t walk streets and find food in trash cans. STOP COMPLAINING people!
ARB, that was Racist as F*8k, because “You” created those sentences.
Jeff, What are you not seeing hear? If ARB hadn’t created those words, then it’s a copy & paste issue. So maybe it’s not racist.
Also Jeff, “Here in the US, the people living under bridges STILL have it better than poor people in other countries. Poor people in other countries can’t walk streets and find food in trash cans.” Really?
Have you ever been to the worst parts of the American ghettos that resemble third world, war torn countries?? I’ve seen parts of Mexico, Mid East, South America, etc that look better and are safer than some of our own American turf.
The sad part is that ARB doesn’t even think he is racist using those words. And you wonder why so many minorities don’t feel welcome in predominately white areas of the country.
Invest in the Midland, but live in a coastal city where there’s more diversity and acceptance of all people.
Jon and Jen, pointing out a stereotype is NOT racist. Period. That’s all ARB did.
And pointing out ghettos that are like 3rd world countries, assuming I agree that it’s “just as bad” (and I don’t – more in just a sec), that’s still only like 1% of the US. In ARB’s “negative US” (and maybe yours too), It’s like 33%. I’ll give it to you another way — he mentioned people with worthless degrees. People in the ghettos (as you described) don’t get worthless degrees. So I’ll give you maybe 1% have it bad here in the US, but the rest need to wake up and simply be thankful they were born in the US.
As for being “just as bad”, nope, sorry, it’s not. Why not? Because the people in other countries would give anything to have the CHANCE TO START here in the US, than to have to start where they are at. You understand people risk there lives floating on anything they can find just to get a chance to try to make it here in the US!?
It’s all relative, and the worst of the worst here in the US still have it better than the rest of the world.
Without having any data to support this, I think there is a large segment of unseen Millennials that live with parents for the sole purpose of “getting ahead” and not to have a particular lifestyle.
My closest dozen or so friends and I are in our early 30s and most of us either have frugally lived with parents to save up for our own down payments and have subsequently bought a house, or are in the process of doing so right now. Four years ago, after grad school, I moved back in with my parents (we live in the Bay Area) and I spent my first year and a half doing nothing but paying off my $50,000 in student loans (7% grad school loans) and preparing for my fiancee to immigrate back to the US. As a married couple, we live with my parents, pay $50 in rent to cover some inconvenient costs we are responsible for, pay for our own expenses otherwise, make a combined $130K (not great for the Bay Area), and have been saving almost everything that we make (88%) and investing (currently hold close to $70K in CDs to mature in 2018 and 2019) so we can potentially have a down payment within the next two years, or even move out of the Bay Area with, hopefully, $200K. We have three pairs of married friends that have done exactly this or are doing exactly this as well. In fact, I think I only know one or two fellow Millennials that have this so-called Millennial lifestyle. Perhaps this is because we are not socializing through this same lifestyle. I don’t know.
While this is, indeed, a form of taking advantage of our parents, living at home and frugally saving seems like a more rational behavior than to live lavishly, expect an inheritance, and simply live off parents. I think this frugal saving and living at home lifestyle is pretty normal around the world, outside the US, and has been for generations, especially in countries where going into debt was not easy or was viewed as dangerous. My wife is Russian and she has this mentality, while my mother is Italian and her entire family has this relationship with debt as well. But again, this might be a result of an upbringing in more rural areas. Regardless, I respect the caution.
Also, living in my parents’ home is no walk in the park. It sucks. My friends agree and we all have stories of our quiet and respectful suffering (I say quiet and respectful, because we are also grateful for the opportunity to save so much money). Nevertheless, it’s not great; parents are loud and nosy, and it can put a strain on the normal ebbs and flows of married life. I feel like this aspect is not usually explored when talking about Millennials living at home.
Finally, I’d like to make an observation about lifestyle and living at home:
Conversely, my sister does epitomize the so-called Millennial lifestyle, as she spends large portions of her money on expensive makeup, clothes, eating out, and traveling, while she has credit card debt and large student loans. She lives on her own for much of the same reasons I just wrote about. Yet, I feel comfortable saying that she is far more dependent on my parents than my wife and I are. She is at the house every day, eating dinner my parents prepared (and sometimes mine), using the internet and picking up her packages, having my mother help her with her work (they’re both teachers), and asking for money to travel.
The lifestyle and attitude is certainly not tied to living with parents or not. In fact, I think it makes more sense for independent Millennials to bite the bullet and live with parents and save up as much as possible asap so they can become financially independent. It’s my default advice for people coming out of college.
This is a long way of saying that I agree Millennials shouldn’t buy avocado spread meals, but they should still live with their parents (almost impossible not to in the Bay Area anyway)
I’m a millennial, and I’m finding two main things here I’m disagreeing with.
1. The assessment of cheap living. Simple fact is a lower % of millennials own houses than prior generations while they were of the same age range. Maybe housing just seems to be a lower % of our income than for prior generations because more of us are opting for a 800 dollar a month apartment instead of a 2000 dollar a month mortgage. I know personally I’ll fall in the housing taking up 5-6% of my income this year, but its because I bought a small condo 11 years ago so I have a relatively cheap place to live now with a six figure income. I could go buy a house and bring my housing expenses up to the 20-30% range…but why?
2. The inheritance concept. The median amount a millennial expects to inherit is 1,000,000, but the median net worth of their parents isn’t nearly this high. I know a TON more millennials who think they’ll never be able to retire and have to work into their 70s than those that think they’ll inherit 1m+ at a young enough age to allow them to never have to hold a steady job. In fact, of all my fellow millennials I’ve known from school and work over the years I knew literally none who thought that.
I also don’t understand the general griping about generational wealth some posters seem to have here. Fact is 80%+ of millionaires are self made…there are far more self made millionaires than trust fund babies out there…and really what is the alternative, should the government just swoop in and take everything you own of value when you die because inheritance is bad? What claim should they have over property you already paid taxes on? I’ve never met anyone who wanted to will their entire estate to the government, or anything for that matter, yet of met plenty of bitter, jealous people who would like to force others to do just that.
I totally agree with you about the inheritance. According to the the Global Wealth Report 2016 ), there are over 13.5 million American millionaires. I suppose it’s possible that there are 100k+ millenials who expect to receive that much inheritance money, but I certainly don’t know any of them.
My problem with generational wealth is that inheritance recipients STILL see themselves as “self-made” — a fairly dubious concept to begin with, all things considered. It’s funny: people who truly built up their own wealth through hard work and smart investments recognize their opportunities MORE than the people who had it handed to them (you’ll see Sam talk about the foundation his parents built for him in terms of learning and growth; Bill Gates and Warren Buffett both signed a pledge to give away over 95% of their wealth, and they signed a petition to beef up the estate tax, etc).
You probably got that 80%+ statistic from Dr. Thomas Stanley, I’m guessing, so you won’t be surprised by this stat: on page 154 of the Millionaire Next Door, Drs. Stanley and Danko write,
– “Like many other gift receivers, James views himself as ‘self-made.’ In fact, about TWO OF EVERY THREE adult children who receive significant cash gifts periodically from their parents view themselves as members of the ‘I did it on my own’ club. We are amazed when these people tell us in interviews, ‘We earned every dollar we have.'”
Emphasis mine.
It reminds me of that one woman Sam wrote about who, while recalling her life story, leaned back in her chair, kicked her legs up, and concluded it by saying something like, “And I did it all on my own,” while in the back porch of her father’s estate. I can’t remember which post it was, though.
At least if it goes to the government or, better yet, a charity of the donor’s choice, there’s a chance the money will go to someone who will appreciate it.
(I’m by no means saying 100% should go to the government, but a portion of it should.)
Why should any of it go to the government? Just because you have the perception that its unfair someone inherits more than you? Look if I die with 20 million in the bank…I ALREADY PAID TAXES ON IT WHEN I EARNED IT. What is unfair is the government saying well…that guy had a lot of money…let’s take some just because we can! If I was living I could spend it all on booze and hookers and that is perfectly fine…but if I want to help my offspring get set up in life…oh heck no, that isn’t fair…let’s tax the crap out of it?
I used to work for a family owned company that had a book value probably somewhere north of 30 million dollars. The owners son worked there and obviously would be taking the reigns when his dad wanted to retire. I worked side by side with him for a year and could assure you he was a worker, not some nitwit sitting around waiting for dad to die so he could inherit millions. If the dad walked outside and got struck by lightning and died tomorrow…what do you think should happen? The government should deem that 30 million is too much to inherit and his son should get spanked with a massive tax bill?
What would happen then? The kid would sell the company, pay the tax bill, and walk away. Who really wins other than the government? Or maybe the kid would take a loan to pay the tax bill…and then who really wins other than the government and the banks? What happens in 30 years when its time to pass it on to the next one in line…time to go back to the bank to take another loan to pay taxes? Yeah…that isn’t a ridiculously terrible idea. Funny how often I hear people complain about the banks and then conjure up genius ideas that would be like giving free money to the banks because someone stands to inherit some assets that were already taxed in the past and they deem it as unfair.
Yeah maybe some people that inherit money and know they are coming into money squander it and you think man…that jerk really didn’t deserve that money…but taxing the crap out of that money just hurts people like the above situation I talked about, and it hurts the person who actually earned the money who loses the right to do as he pleases with his legacy when the government steps in and robs his estate when he dies.
I know a guy who inherited 250k + a paid off house when he was 22. By 26 all the cash was gone(he had some expensive drug/party habits) and he lost the house due to not paying taxes. An inheritance of that size probably isn’t on anyone’s radar for what would be required to make you a spoiled rich kid trust fund baby…but the point is everyone with a large inheritance(again see above example where the owner’s son was one of my favorite coworkers during the 10 years I spent at the company) is an undeserving jerk, and even people who get modest inheritances can be complete jerks who absolutely foolishly waste it. I look at that kid like man…if I basically inherited a half million at 22 I’d have invested it all, continued to work hard, and easily retired by 35 at the latest and he just blew it all up his nose. I just think “idiot,” the thought that “if the government just took that money we’d all be better off” never crosses my mind…I don’t know why it does for so many people just because the dollar amount is larger in some cases.
Sure, those are all solid points.
I want to reiterate, though, that I never said the government should take 100% of a person’s estate. That would be ridiculous. I would rather the millionaire/billionaire donate most of their wealth to a charity (or charities) of their choice. I firmly believe that you can’t go wrong if you make it your goal to decrease human suffering, however you believe that should be achieved. If you think the best possible route is to give to your kids, then give to your kids.
I completely agree with you on a few points. The estate tax CAN harm family-owned businesses and farms. The size of the inheritance doesn’t necessarily proportionally affect the recipient (though I would argue that $250k is, statistically, well above the median; I wouldn’t call it “modest”).
There are real problems created by both viewpoints that aren’t easy to solve. Some of these things should be observed on a case-by-case basis, and I’m not about to make the argument that a piece of legislation that generalizes EVERY inheritance would be ideal.
I just think that the government reserves the right to tax *a portion* of a person’s wealth, which I’ll be happy to pay when I die. It’s a small buffer against “old money.”
But I love America for the opportunities it’s given me; not everyone shares that view.
When it comes down to it, even though it seems to rile people up along the class lines, the amount of taxable income of households in the $10mil and over category that’s held in estates and trusts is only 1.6% of that group’s entire realized annual income of $300bil, which, when you factor in the $2-4tril in government revenue/year based almost solely on income tax alone, this whole argument becomes pretty silly. It’s certainly nothing to get angry over.
I treat it as more of a thought experiment, really.
I think Buffett is a great example of this too.
Give to charity! Just make sure that 3 of the 5 charities you give to are foundations run by your….wait for it…children!
What an idea. Send billions of dollars into their control with tax favorable treatment so they can sit on a board and collect huge amounts of money for the rest of their lives AND go on the news to pump your “generosity”!
It’s actually amazing how stupid he thinks the average person is and even more amazing how right he is.
I was born in 84 in China and grew up in Canada. I worked in the financial industries in Toronto, Montreal and Shanghai.
Most of my friends in Canada own at least 1 property by now. Many of them received money from their parents, they are all hard working and manage their money carefully. They all dream about achieving financial independence. We spend lots of time discussing how unsustainable the Canadian health and pension plans are, and how we should prepare our future without relying on social safety net.
When I moved to Shanghai, what a shock to see almost everyone around me wearing fancy clothes, eat-out all 3 meals in restaurant + freshly squeezed juice + Latte, taking at least 1 annual vacation abroad. Many of them don’t have rich parents, they are hard-working too, but they all spend money like the kids in your article. Once I get to know them better, I don’t blame them. The real-estate in Shanghai is so unaffordable that most young people gave up the idea of buying any property on their own. Either you becomes homeowner with parental money or you would never become one. 1 trip to Europe = less than 5 square feet condo. Sometimes they joke about how many years of frugal living they need to buy a bathroom in Shanghai. They are very offended by media critics labellling them the spoiled only-child generation.
I don’t want to see what’s happening in Shanghai to spread to North America. So I hope more people are working on how to create opportunities for everyone, and not wasting time at bashing millennials or the future generations.
Wonderful insight. Thank you for sharing. And makes total rational sense that if housing prices are so unaffordable, you just give up and spend on what you can afford.
It is absolutely crazy how expensive Shanghai property is compared to per capita GDP. I haven’t done the math, but if it was like for like here in San Francisco, then the median home price in San Francisco might be more like $10,000,000, or more than 10 times median household income.
I keep thinking about this question:https://www.financialsamurai.com/why-is-united-states-property-so-cheap/
I was born in 84 so I guess I’m am older millennial, but my husband is 10 years my senior-makes him GenX I guess? His parents gave us money (3.5 % fha loan plus closing costs plus extra yo buy things to fill it) or down payment in a house in 2011 (best time to buy). 5 years later we sold and was able to make enough for 20% dp on our new house and pay off all our CC. Thank you Mommy! This definitely helped us move forward and look more closely on our finances :)
I’m a Millenial. I’m pissed off that the avocado guy is getting this much coverage. Ramit Sethi wrote about him, too.
Shouldn’t we know by now to not give attention-seeking morons exactly what they’re looking for? This guy, having received a $34k loan from his grandpa to start his first business, is not part of the penny-pinching, hard-working Boomer property owner he claims to represent — that’s why he gives shitty advice that’s only applicable to the Millenial who thinks he’s going to get ~$1mil in inheritance.
(Which begs a question: Who are these Millenials using Personal Capital? How the hell has Personal Capital managed to corner the future-rich Millenial market so well? Those stats sound fishy, like Personal Capital users are just trolling the surveys, but whatever. Maybe the marketers have been taking really good notes from The Millionaire Next Door. I want in on that demographic).
I’m not going to get much of anything from my parents, who I doubt are going to get much of anything from their parents, either. I’ve read the article on the “Massive Generational Wealth Transfer,” but I know my family. After 30 years with a major tech company — and multiple patents — my father got laid off two years before his pension plan really kicked in. He doesn’t need to leave me anything.
Even if I do inherit some money, I’ll probably give at least 50-75% of it away because, as the Oracle of Omaha himself says, dynastic wealth shouldn’t exist in a meritocratic society. You either do your best to earn it, or you don’t. My parents and grandparents gave me my demeanor, intelligence, drive, and even helped a little with my college. I don’t need their fucking HOUSE, too. That would be boring.
But it’s quickly becoming the only way a person can compete with all the other kids who are inheriting multiple properties (which their parents aren’t even going to have to pay taxes on). When it comes to the “Estate Tax,” it’s less about the money and more about the fact that the ultra-rich are turning their kids into lazy asses.
To use a metaphor involving Monopoly: It’s one thing to start the game holding the property card for The Reading Railroad, and another thing entirely to be set up with hotels on Park Place and Broadway. You’re apt to think that it’s an entirely different game. Why not just clear the board?
Then again, I love all the articles shitting on Millenials. If we’re as bad as these articles make us out to be then, given time, I’m going to bury all of my peers. Regardless of “inheritance” money.
Avocado toast doesn’t even sound good.
It sounds bitter
I’m not a big fan of avocados in general, honestly. Consistency’s weird.
Thanks for your comment. What do you think is the reason for why a random guy in Australia talking about avocado toast has triggered your anger?
Maybe I’ve just become inured to everything after all these years, but I find this whole uproar quite entertaining!
It has less to do with the actual post and more to do with how much everyone’s talking about it.
It was purposely written to be shitty advice and to get people riled up.
I’m not mad about the trolls; I’m mad that people I respect are feeding them.
I think I understand some of your anger at society after reading some of your posts. The only thing I would recommend is to stay in college for as long as possible if you can afford it. It is a cruel, cruel world out there with little or no safety net if you don’t have well-to-do parents.
But I think your perspective will change after working for a couple of years and see how easy some of your peers have it.
Thanks for reading!
It’s funny you would assume I don’t work currently. Right now I’m on vacation from my job at a factory in my hometown, where I work from 3:30PM to 2AM Monday-Saturday while I run the Stand Up and Speak Up campaign for Overcoming Odds, a non-profit that’s looking to reshape the adoption industry, on the side.
Shameless plug (there really are some great stories in there): https://www.overcomingodds.today/stand-up-speak-up/
Trust me: I *KNOW* some of my peers have it easy.
But I’m fully on-board with the idea of working 60-80hr weeks so that I can get ahead. I’ll get there one day.
Thanks again. I actually started my blog bc of this site. Hopefully someday soon you can point to it as an example of someone who followed your advice, step-by-step, to build a passive income stream.
I suspect this attitude has something to do with the latest leftist “white privilege” meme subtlety pumped into young skulls full of mush during the K-12 public school years. M’s feel they’re the last chapter in the white domination of the world, so that when they inherit mom and dad’s estate, they’ll lavishly spend it, enjoy life, not reproduce, bringing on the wonders of a multicultural society that will finally flourish with equality and income fairness for all.
Two days ago, my co-worker was ranting that rich people want to deny poor people the luxury of eating avocado toast. I had no idea what she was talking about. Later that day, I saw that many people in the FI community were talking about this story. I tried to explain to my co-worker that it is just about reducing expenses to free up some money to be able to save more. She was not hearing me or giving up her avocado toast.
I’m a millennial by definition, but maybe not in mindset.
My parents have given me help in two major areas.
1) Paying for my college degree
2) Instead of gifting me money for my house, I have actually taken out my mortgage with them at a lower rate (2%). This has allowed us both to benefit in this low rate environment.
Even though I will probably inherit so much money I will never have to worry again (5 mil +), I am still maxing out my 401k, spending no more than $100/mo out to eat, I still have never been to Europe. Maybe I should live it up some more. My future wife and I are near your happiness income level (2017 probably combined $200K), and I think we can hit $250K in the next 5 years. We are more focused on getting a million dollar house (NYC – NJ Suburbs). And I would not ask my parents for a dime towards the down payment… although a 2% mortgage will be nice!
Great. I’ve never had avocado toast, but guess what? Now I want avocado toast.
ha ha ha! I’m not a boomer, but I plan to eat it all! If I need to buy a three $250,000 bottles of Chateau LeWilder 1834 and put them in my IV? I’m doing it!
My 47 year old wife has been making avocado toast for 10 years. Sorry millenials, but this is one trend you are quite late to. I made mine this morning – with Beckman’s sour dough bread, one half of a Haas organic avocado, a sliced hard boiled egg, and a lightly applied coat of pink Himalayan Salt and some pepper. Lovely!
Oh, and bumming off your parents who are more than willing to enable you…that’s been around for decades too. Honestly I don’t care because I have no control over how people I don’t even know…behave.
As for me, I get my inspiration from “The Millionaire Next Door,” which provides clear counsel: no enabling. Instead, encourage self reliance.
Speaking from experience, living in a shit hole for the first 11 years after college builds strength, humility, and hopefully a bit of liquid net worth.
I’m a millennial and I do wonder if there’s not enough consideration given to absence of loyalty by employers when discussing millennial employment habits. Frankly having been laid off twice in my first 2 years of employment, and growing up around crumbling cornerstone companies laying off tens of thousands made short term job stays an expectation. I know it sounds defensive but for many people it’s the truth. Either way I’ll keep grinding and taking care of myself, because no one else should!
You make a great point. Companies are more ruthless now than ever. If there’s a better opportunity, I would go for it. Are used to scratch my head at all the job popping every 2 to 3 years. But after spending a couple years consulting for some start ups, I see why. There’s a lot of failure, competition, and disloyalty you make a great point. Companies are more ruthless now than ever. If there’s a better opportunity, I would go for it. Are used to scratch my head at all the job popping every 2 to 3 years. But after spending a couple years consulting for some start ups, I see why. There’s a lot of failure, competition, and disloyalty by companies themselves who don’t promote from within and screw employees out of proper compensation packages.
Long gone are the days of multi decade and loyalty. It’s time to be greedy for yourself? The only problem is, sometimes you make mistakes.
I imagine the pendulum will swing back a little in the future, even now I see my company reaching out to employees for advice on how to retain employees and keep them in the same job longer (traditionally 18-30 month jobs).
Thanks for the reply!
So there are some millennials that are a bit pampered… They have all the right to live life in their own way. Especially if they can fund that kind of lifestyle. I know plenty of people (with a millennial age) that are hard working and don’t splurge money on avocado toast.
In another comment here (from Apathy Ends) it’s simply explained, that even within the millennial group you have lots of different people. That some people are offended by his advice is their every right. Who is that random person in Australia anyway who dictates how they should live their live. I know I’m not though.
As someone from a fairly average cost of living area on the East Coast, I know relatively few cases of millennials being handed expensive cars/homes. I definitely think this is limited to a fairly small percentage of the overall population, and is more common in the major cities. Even there, however, for every 20-something who is given a half million dollar home, there are probably several who are struggling to make ends meet.
“If you’re willing to spend $19 on avocado toast when you’re not already rich, then you’re probably willing to spend aggressively on other things and not save. After 10-20 years, you’re screwed if you have no safety net.” This is EXACTLY the point I made in my post on the subject. I think the people bothered by this article are the exact people he was targeting. Similar to the Latter Factor, it isn’t about one avocado toast, one latte or even 365 lattes…it is overindulging when you don’t have money to overindulge. In that mindset, rarely do you limit yourself to one indulgence. This is about spending freely when you can’t afford to.
If you have the money then have at it! No one is judging for spending. The judgement comes when you spend on $19 toast then complain later that you are broke. On the other hand, if your parents are footing the bill and the arrangement works for them then it’s nobodies business how you spend. Go get yourself an avocado toast and grab me one while you’re at it!
Sam addressed that a good portion of millennials are assuming/expecting a large inheritance of some sort. I kind of see that as a reason why they’re less worry about money. I use to work at a restaurant bar in San Fran and a lot of the young patrons tipped really, really well for their age.
My average tip was 18% and they order a lotttt of fancy food. If someone wanted avocados toast but they were truly broke, I don’t think they would tip me 18%. I overheard one girl (22 years old max) complaining to a bunch of her friends that she had to take another family trip to Barbados or some tropic paradise so I think it’s some wealth transfer thing.
For sure! I realize many are expecting inheritances or have parents footing the bill and it’s awesome that they are so generous with tips! Many people don’t learn that until a later age.
Anywho, the quote I pulled was from a comment Sam made to Laura above and I think it still holds true. Not ALL who frequent fancy restaurants can’t afford them. Still, the ones who complain about not being able to afford certain luxuries yet spend freely on others are the ones that this is directed at. Otherwise, wh
en you have all the financial resources in the world at your disposal you are less likely to complain that you can’t afford something – I guess you’re more likely to complain you have to go to Barbados again instead! Poor thing.
Ohh lord, another one of these stories where the comments are filled with everyone making 6 figures or inheriting wealth, then belittling those that live with their parents.
I make about 55K/year as a scientist, luckily with great benefits, govt pension, and lots of vacation. I do not own a home. I live with a roommate who owns his home. I am 38. I do not understand why this is even a conversation anymore. There will always be people who earn more, or are given more. But that doesn’t mean they have better lives. And in the end, a few years after someone is dead and gone, no one will remember you had a bentley, that you lived in some luxury neighborhood, if you lived with your parents till 30, or if they helped you buy a home. We all end up in the same place, so why obsess over who has more now?
Although my husband and I are definitely Gen X, I can’t say I’ve seen a lot of this is Ohio. I was born into a very working class family, however, and anyone I know still living off their parents has mental health issues or went through a bad divorce. I have a few friends who were children of first-generation immigrants whose parents footed the bills for college and helped with housing,but many of those parents are living with their children and grandchildren in multigenerational households.
We hope to leave some kind of legacy for our kids, but have no plans to buy expensive homes or cars for them. Maybe I have read too many 19th century novels,but I don’t want my kids or grandkids to end up becoming wastrels with nothing to do but gamble, shop,and chase tailand deplete the legacy we worked hard to create.
The real question is why do you want to leave them a legacy at all or even try to?
I agree with you Jen. I am more than willing make the playing field as even as I can (better neighborhood/stable family environment) BUT I’m not tilting the entire field (cars, designer clothes etc.) so they’re guaranteed to make the goal.
Ignore Aiden, he’s being a total downer.
Hey Sam! I like that anecdote “The more things change, the more they stay the same.” At the extremes, the spoiled California avo-eating millennial is equally as troubling as the self-righteous Trump-loving blue collar worker. In Zen, they say the Middle is the way. The key is to find a balance. Working your WHOLE life stressing out and complaining about mortgage payments and the inability to keep up with the joneses seems silly to me. Rich parents over-spoiling their kids is foolish too. Beware of those things in life society says you’re “supposed” to do. Focus on the cheap thrills of life: Being outdoors, playing sports, going hiking, chillin’ at the beach, reading, writing, playing an instrument, hanging with loved ones. Peace.
TBH, I have EXTRA respect for kids with rich parents who don’t want anything from them and want to make it on their own. They are probably rare though. And also TBH, if my parents were rich, I’d most likely piggy back off of them too for a longer time. Satisfaction comes from good relationships with people you care about and if you have that, you’re good!