Purchasing a first home is a high priority goal for many clients. This is particularly true for Millennials based on current demographics.
On the surface, this sounds easy, but with many banks requiring a 20% deposit, a full time work role and sourcing the ongoing payments for the loan, a home purchase can be a difficult and onerous task that requires forgoing or delaying other goals.
As an example, the 20% deposit is getting increasingly harder to achieve, with Domain’s December 2021 House Price Report showing capital city buyers across the nation forked out an average of $1,066,133 to buy a house over the past 12 months.
Without going into full time vs casual employment, let’s have a look at the classic statement from a few years back featuring everyone’s favourite breakfast ensemble – smashed avo and feta (and maybe some bacon and eggs) and the compulsory cappuccino.
Bernard Salt wrote in an article for ‘The Australian’, “I have seen young people order smashed avocado with crumbled feta on five-grain toasted bread at $22 a pop and more. I can afford to eat this for lunch because I am middle-aged and have raised my family. But how can young people afford to eat like this? Shouldn’t they be economising by eating at home? How often are they eating out? 22 dollars several times a week could go towards a deposit on a house.”
So, for those with calculators, they will have worked out that $22 a meal. If this is ordered say twice a week, it totals $2288 per year. Whilst this would certainly help cover rent, it won’t get a home deposit by itself!
Of course, his point was not that the smashed avo by itself would get someone a home, but that we need to consider our needs and wants when creating our budgets. At the end of the day, it isn’t easy for everyone to save and it often comes at the expense of luxuries such as eating out or paid activities and holidays, but for anyone who wants to buy a house, saving the required deposit means reducing discretionary spending and establishing a means for storing the hard earned home deposit.
It is often pointed out in the smashed avo discussion that there is also the value of social engagement, absolutely! With present day circumstances and with many people having faced lockdowns and isolation, this personal interaction has value in itself and the target for discretionary savings may need to fall elsewhere. The debate on what is a need vs want is a personal debate so I will leave that for individuals out there.
So how can we have our smashed avo and eat it too?
This is the best bit…..prepare it ourselves. Sometimes the simple things in life can be the best. Nothing is to say that with a little preparation, a morning picnic with friends can be a great way to get outdoors and save a few dollars on the way.
Courtesy of taste.com.au (https://www.taste.com.au/recipes/avocado-feta-smash-toasted-rye/5d68e7c9-9d57-43cd-bb91-392588c3c0d9), here is a very easy morning breakfast to put together.
- Simple ingredients which should feed around 4. Here are the estimated costs
- 2 avocados – ($3 to $4)
- 80g creamy feta ($1.50 for around 100g)
- 2 tablespoons fresh mint ($3 or even better, grow your own herbs in pots – smells great and can save a lot at the checkouts)
- 1 lemon ($1.50) – add to taste (and stops the avocado from going brown)
- Half a loaf of rye bread or any crunchy bread would really be fine (around $3 to $4 for a loaf)
Total expenditure ~ $13.
Preparation is easy, mix the ingredients and place them on the bread.
Of course, if you are at home, you could impress your guests with an egg and some bacon too – having spent less than $5 per person on the avocado dish, you can treat everyone a little. Maybe as an accompaniment, some homemade baked beans to impress your friends further (https://www.taste.com.au/recipes/quick-boston-baked-beans/520a0aad-3d9f-4c68-926f-1fe8713a0088).
The smashed avo debate was never going to solve the homeownership issue but it does highlight the value of budgeting. It doesn’t matter what your expenditure goal is, making your own breakfasts isn’t going to necessarily get you that dream, but will certainly leave a few more dollars in your pocket and heading in the right direction.
Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.