Remember about a decade or so ago, when everyone was blaming economic difficulties on 20-something yuppies buying smashed avocado toast and coffee?
Well, current economic reports pretty clearly show that what was bogus back then is somehow even more bogus now. This rhetoric mainly draws from older generations and/or the politically conservative. It doesn’t take a genius to know that a major national downturn doesn’t come about as a result of some people buying a slightly special breakfast or a sweet treat every so often.
The problem is that certain social demographics and news media machines that favor conservative politics have been handing out inaccurate information like a giftware wholesaler sells bric-a-brac.
Today, we’re going to look at some prominent myths around spending and debunk them.
Myth 1 – Millennials and Gen Z Spend Frivolously
The “Millennial Housing Myth,” as it is called (that’s right, Boomers, you’re so wrong that economic experts have a name for your mistakes), positions Millennials and Gen Z (“Zoomers”) as narcissistic, selfish, frivolous spenders. It’s the echo of the avocado toast and latte narrative.
Aside from being extremely dismissive and invalidating of the very real economic struggles faced by 35s and under these days, the data from recent (and not so recent) studies shows that it’s just blatantly incorrect.
The myth came in 1999, from a book by financial advisor David Bach, who was the first to propose that people could simply un-spend their way to wealth. His contention was that we spend money we don’t have on things we don’t need. And while there is some minor anecdotal evidence in agreement with that statement, the facts show that Millennials and Zoomers are some of the most capable savers in generations.
And really, they’ve had to be. While data shows that Baby Boomers hold more than 50% of the world’s wealth and aren’t really doing anything beneficial with it, Millennials and Zoomers have had to rise to a cost-of-living crisis and housing crisis that forces them into expensive renting arrangements. As a result, while there is a rise in behavior called “Doom Spending,” where economic pessimism leads to prioritizing immediate splurges to self-soothe, for the most part, our youngest generations are scrimping and saving all that they can to maximize savings and financial security.
Myth 2 – Younger Generations Don’t Want to Work
Another popular myth from our wonderful older generations is the simple claim that Millennials and Zoomers just don’t want to work. They perceive their descendants as decadent and lazy. But, again, it’s easy to see how this is mere anecdotal generalizing.
The origin of the myth is difficult to pin down, but it seems to stem from two main things: different expectations of outcome from work, and a more educated society.
There used to be one way to work – the boss’s way or the highway. And since that was the norm (especially for the generations that lived through the Great Depression, WWII, the Cold War, and more), there was very little backlash against it.
However, now, we have more access to information and research data than we’ve ever had before. Not only that, but the COVID pandemic showed employers and employees just how much work can be effectively done from home.
The result? An educated generation that is informed on their work rights, understands mental health needs, and is blatantly aware that although they may work the same hours as their forbears, they’re simply working for less these days.
The aforementioned miscommunication comes from a generation that is simply advocating for its own well-being, trying to get a livable wage while not burning themselves out as they are pulled in all directions by work, family, side hustles, and self-care. However, because this level of advocacy hasn’t been seen before, it’s regarded as entitlement and laziness by older generations.
Myth 3 – Young People Just Don’t Save For Deposits
Again, a gross oversimplification. While it’s true that younger generations aren’t saving for home deposits like people used to, it’s not for a lack of trying. And it’s certainly not because they’re all eating overpriced avocado toast.
The simple truth is that interest rates, much like the job market, housing market, and inflation rate, aren’t what they used to be. Where back in the day your average first home buyer could get an interest rate above 10% (reaching a peak of around 16% in 1990), these days a homeowner is lucky to get an interest rate of 7%-8%. In 2021, interest rates dropped as low as 2.19%.
The evidence shows it’s not that young people aren’t saving like they used to, it’s that they can’t accumulate wealth like their ancestors once did.
The Bottom Line
There is a glut of myths that like to blame younger generations for the way the economy is right now, but these myths fall apart instantly once you look at facts and figures. The real truth is that for a long time now, the Millennial and Zoomer generations have been the scapegoats for the fallout of previous generations’ relative economic ease.
The data doesn’t lie. When the Baby Boomers were where Zoomers and Millennials are now, there was more economic opportunity, housing prices were low, and wages were higher. And now, those older generations are cashing in on their early investments, engaging in high spending behaviors that are raising inflation rates and making the inequity between generations ever steeper.
Of course, not all of the blame can fall squarely on the shoulders of a single generation, as politicians and those in power have mismanaged (or continue to mismanage?) housing supply and demand, while also introducing more taxes and ineffective policies that do more harm than help.
Overall, it’s a depressing state of affairs, and the world right now is a cruel place if you’re a 25 to 30-something person trying to get a foothold in the cutthroat world of housing and real estate.
But, at least you saved a good fifteen bucks on that toast.
