
What Do Millennials Spend All Their Money On? - curtis
http://www.motherjones.com/kevin-drum/2017/05/what-do-millennials-spend-all-their-money
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tsunamifury
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.

~~~
closeparen
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.

~~~
Camillo
> they pushed outwards [...] into racial minority neighborhoods which didn't,
> at the time, have a legal mechanism to meaningfully resist.

AFAIK in the boomer years the prevalent phenomenon was the opposite:
minorities moving into formerly majority neighborhoods, and the majority
moving out. This was known as "white flight".

~~~
closeparen
You're right, I'm talking about the (mostly stalled) attempt by Gen X to walk
back white flight in the 1970s, which is where much of the current thinking
and policy around gentrification comes from.

~~~
coffeevradar
According to Wikipedia, for Generation X "demographers and researchers
typically use starting birth years ranging from the early-to-mid 1960s and
ending birth years ranging from the late 1970s to early 1980s."

So any members of Generation X were still children in the 70s or not yet born.
I think you mean a different cohort or a different time.

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doubleunplussed
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
> 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
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.

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rayiner
> “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
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%.

~~~
AndrewKemendo
As a veteran homeowner I can tell you I paid 0 down on a Fixed rate.

~~~
tptacek
That used to be very easy to do, but got harder after 2008.

~~~
AndrewKemendo
Did mine in 2013

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panic
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
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
Not sure why you're being buried. Part of the ACA was to increase the burden
on younger, healthier people.

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nihonde
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.

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JusticeJuice
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
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.

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markvdb
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.

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jimjimjim
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
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
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.

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madeofpalk
> 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
What's the cause of the increase?

~~~
kolokolo
Inorganic population growth by immigration. There are heaps of millionaires in
China and the banks are giving them quite some leverage.

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nathanvanfleet
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
Yeah it use to be IPO and buy a house.. harder nowadays.

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gedy
Rent

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Mao_Zedang
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

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bfrog
Rent and student loans

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p0nce
So, it seems millenials are quite frugal after all, and previous generations
aren't as much.

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k__
I save most of it. Stock market etc.

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wcummings
>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
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
I think both numbers are _really_ high.

~~~
doubleunplussed
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%.

~~~
pikzen
>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.

~~~
lazaroclapp
Well, it is technically possible he is at the national average income (not the
median wage) and lives in a place where rent is way more affordable than the
cities most of HN lives in. U.S. GDP per capita is $55,836.79. That is $44,558
after taxes in Knoxville, TN (I am picking a city, but it could be more
extreme, he could work remotely from a rural area in the U.S. or from, say,
Belize). This means 25% towards rent is $1163. So, in Knoxville, Zillow says
that is a 3 bedroom home.

More realistically, that same amount is a small studio in e.g. Austin, TX.

Now, the trick is that the average income might be $55,836.79, but the
_median_ personal income is ~$41,520 [1]

[1]
[https://en.wikipedia.org/wiki/Personal_income_in_the_United_...](https://en.wikipedia.org/wiki/Personal_income_in_the_United_States)

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strictnein
Avocado toast

~~~
alanfalcon
_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
> _And it has ingredients from [artisanal] places I haven’t even heard of,
> like Detroit._

Ah, yes, 'du-twah'.

