The Blubber

People are throwing away their money on sandwiches and coffee during their commute to work, a venture capitalist said in an Instagram video last week. Instead, they could be using that cash for savings or investments.

“A coffee for $5.50. You head to work and spend $15 on a sandwich,” O’Leary remarked in the video. “What are you, an idiot?”

O’Leary argued that these daily $20 purchases could quickly add up, especially for those trying to achieve financial stability.

“Most people, especially those working in big cities and just starting their careers making around $60,000 a year, waste about $15,000 annually on frivolous things,” he added.

O’Leary’s argument echoes that of property developer Tim Gurner, who famously claimed in 2017 that young people can’t afford homes because they’re spending too much on avocado toast and fancy drinks. His comments sparked a long-running meme about millennials’ love for the popular breakfast item.

“When I was trying to buy my first home, I wasn’t spending $19 on smashed avocado and $4 each on four coffees,” Gurner said. “We’ve reached a point where young people’s expectations are very high.”

Debunking Avocado Toast Economics

Despite O’Leary’s warnings about the perils of daily coffee runs, there’s ample evidence suggesting that people can still enjoy their treats and achieve financial success. Millennials and Gen Z, often mocked for their spending habits, have actually seen a 40% increase in wealth from 2019 to 2023, according to the Center for American Progress. Moreover, younger generations are getting better mortgage rates, with Gen Z and millennials averaging 4%, compared to 4.1% for Baby Boomers, according to Freddie Mac.

These generations have shown that being financially secure doesn’t mean cutting out every small luxury. A 2024 Bank of America report revealed that young people are keenly aware of financial challenges—over 50% of Gen Z adults cited the high cost of living as their biggest obstacle. However, many are turning to budgeting to save money.

“They’re feeling the pinch of rising costs,” said Holly O’Neill, president of retail banking at Bank of America, in a July interview with Fortune. “They understand the need to budget, find ways to cut back, and prioritize their spending.”

Yet, cutting back hasn’t stopped young people from enjoying life’s pleasures. A 2024 report by McKinsey & Company found that while younger generations are aware of financial pressures, they’re still more likely to splurge on dining out. According to the survey, 38% of Gen Z and 41% of millennials plan to spend on restaurants, bars, and eating out.

But as far as financial well-being goes, an extra coffee or lunch isn’t going to bankrupt young adults, according to NerdWallet senior economist Elizabeth Renter, who spoke to Marketplace. She calculated that in a world where avocado toast costs $14 and lattes cost $4, someone would need to give up 5,220 avocado toasts and 15,600 lattes to save enough for a 20% down payment on a $313,200 home.

“So the idea that cutting out avocado toast will suddenly help you buy a house is overly simplistic,” Renter said. “If your daily lattes make you happy and you’re not struggling financially, then go ahead and enjoy them.”