Australian real estate millionaire Tim Gurner came under fire when he advised millennials struggling to climb onto the housing ladder to stop buying fancy toast and overpriced coffee. He was berated around the world and rightly so. Let’s get one thing straight: millennials are not frittering away their future pensions on avocado and kombucha.

Contrary to the myth, those aged between 25-34 in the UK spend less relative to 55 - 64-year-olds than at any time since at least the 1960s. So, it was the baby boomers who ate more prawn cocktails and drank more cappuccinos. In 2001, the two age groups had the same after-housing expenditure, but by 2014, the younger generation was spending 15% less. 

We think this stereotyping may have been caused by a mix-up between consuming more conspicuously and consuming more. Ipsos Mori found that millennials have a taste for the finer things and place greater importance on owning expensive goods than previous generations. But in reality, such purchases are made infrequently. 

Rising costs, stagnating pay

All the talk of fancy lattes and avocado distracts from the actual problem: millennials face tough financial futures. They are only half as likely to own their home by the age of 30 as baby boomers were by the same age. Even if the best economic conditions of recent decades were repeated, millennials would only be catching up with the homeownership rates of their (then 30-year old) predecessors by the age of 45.

The problem isn’t just buying a house. Millennials are paying more for the roof over their heads, whether buying or renting, spending an average of almost a quarter of their income on housing, while baby boomers paid a little over 15% at the same age. 

These housing challenges are coupled with stagnating pay packets. 30-year-old millennials are earning less than generation X did at the same age, in inflation-adjusted terms. The stagnation in real pay since the financial crisis, the longest in 150 years, is making it harder for millennials to start saving. This generation is also less likely to be in possession of a secure, full-time contract. 

Millennials aren’t the only ill-prepared generation. The finances of their predecessors, Generation X, aren’t in good shape either. According to the Center for Retirement Research, in the 1980s, almost a third of US households were at risk of retiring with inadequate income. Today, that number is more like 50%. 

Let them eat avocado

So, don’t dismiss the financial struggles of the young with a callous ‘let them eat avocado’. Through no fault of their own, ?their future is not going to be easy and ?their lifestyles may never match those of the baby boomers. The uphill financial battle faced by younger generations may be far more significant than the affordability of exotic fruit.


About Rathbone Investment Management

Rathbone Investment Management is one of the UK’s leading providers of high-quality, personalised discretionary investment services. It manages over £47.54 billion* of funds for individuals, charities and trustees, and is part of Rathbone Brothers Plc, an independently owned company with a listing on the London Stock Exchange. 

 Investment management services are offered in Aberdeen, Birmingham, Bristol, Cambridge, Chichester, Edinburgh, Exeter, Glasgow, Kendal, Liverpool, London, Lymington, Newcastle and Winchester. Offshore investment management services are offered by subsidiary Rathbone Investment Management International in Jersey.

*As at 31 March 2019. Includes funds managed by Rathbone Unit Trust Management. 


Rathbone Investment Management Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.