\n
![](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/09\/GettyImages-1239795515-e1726081618670.jpg?w=2048\")
<\/p>\n [ad_1]
\n<\/p>\n
Your store-bought turkey and cheese sandwich washed down with a Starbucks<\/a> latte will only taste like regret, according to Shark Tank<\/em> star Kevin O\u2019Leary.<\/p>\n People are burning holes in their pockets buying sandwiches and coffee en route to the office, the venture capitalist said in an Instagram video<\/a> last week. Instead, those precious dollars could be placed in savings or investments.\u00a0<\/p>\n \u201cA coffee for five dollars and fifty cents. You go to work, you spend fifteen bucks on a sandwich,\u201d O\u2019Leary said in the clip. \u201cWhat are you, an idiot?\u201d<\/p>\n O\u2019Leary argued those $20-a-day purchases could add up for those just becoming financially stable.<\/p>\n \u201cMost people, particularly working in metropolitan cities, are just starting out their jobs, making the first $60,000, piss away about $15,000 a year on stupid stuff,\u201d he added.<\/p>\n O\u2019Leary\u2019s argument harkens back to that of luxury property developer Tim Gurner, who argued<\/a> in 2017 that young people are unable to afford to purchase homes because they\u2019re wasting money on avocado toast and expensive drinks, spurring a long-standing meme<\/a> about the generation\u2019s affinity for the breakfast food.<\/p>\n \u201cWhen I was trying to buy my first home, I wasn\u2019t buying smashed avocado for $19 and four coffees at $4 each,\u201d Gurner said. \u201cWe\u2019re at a point now where the expectations of younger people are very, very high.\u201d<\/p>\n Avocado toast economics, debunked<\/strong><\/p>\n For all O\u2019Leary\u2019s conviction about the dangers of a mid-afternoon latte fix, there\u2019s plenty of evidence to suggest consumers can have their coffee cake and eat it, too. The avocado toast generation of millennials and their cold brew-slurping Gen Z counterparts have been big winners<\/a> in the post-pandemic economic recovery. Their wealth increased 40% from 2019 to 2023, according to Center for American Progress, a left-leaning think tank. Young people are also getting better deals on mortgages<\/a> than older generations, with mortgage rates averaging 4% for Gen Z and millennials compared to 4.1% for Boomers, per Freddie Mac<\/a>.<\/p>\n The spending habits of these younger generations have demonstrated that financial security and splurging on snacks aren\u2019t mutually exclusive. Young people are keenly aware of financial pressure, a July 2024 Bank of America<\/a> report<\/a> indicated. Among over 1,000 Gen Z adults surveyed, over 50% believed the high cost of living was their biggest financial hurdle preventing them from being successful. The generation has turned to budgeting to save cash.<\/p>\n \u201cThey\u2019re feeling the high cost of living,\u201d Holly O\u2019Neill, president of retail banking at Bank of America, told Fortune <\/em>in July. \u201cThey know they need to set a budget, and they know they need to find ways to cut back, and they look at those budgets\u2026in order to meet those priorities.\u201d<\/p>\n Cutting back hasn\u2019t come at the expense of wining and dining, however. While young people have braced themselves for financial pressure, they\u2019ve also begun to feel more optimistic about the economy, according to a May 2024 report<\/a> from McKinsey<\/a> & Company using a survey of over 4,000 respondents. Younger generations are more likely to selectively splurge on nonessentials, particularly going out to eat, with 38% of Gen Z and 41% of millennials intending to splurge on restaurants, dining out, and bars.<\/p>\n But financial health aside, an extra coffee or quick lunch out isn\u2019t going to break the bank for young people, NerdWallet senior economist Elizabeth Renter, told Marketplace<\/em><\/a>. She calculated that in a world where avocado toast costs $14, and lattes cost $4, if someone wanted to make a 20% downpayment on a $313,200 home, they would have to give up 5,220 avocado toasts and 15,600 lattes.<\/p>\n \u201cSo the whole idea that you could just cut out your avocado toast and all of a sudden you\u2019re gonna have enough money to purchase a house is very oversimplified,\u201d Renter said. \u201cIf your weekly lattes make you happy and you\u2019re not in dire financial straits, then drink them.\u201d<\/p>\n<\/div>\n\nRecommended newsletter<\/u><\/strong>
\nTerm Sheet:<\/strong> Industry-leading news and analysis on private equity, venture capital, and deal-making.
\nSign up here.<\/a><\/div>\n