GIVE UP SMASHED AVO AND STILL MISS OUT

Cutting back on frivolous spending will help young Aussies get on to the property ladder – in about 51 years

FIVE years ago, the barrier to home ownership for young Aussies was controversially summed up by two words: “smashed avocado”.

A divisive Bernard Salt piece for The Australian lamented the spending frivolity of our youth, particularly ordering “smashed avocado with crumbled feta on five-grain toasted bread for $22 a pop”.

“Shouldn’t they be economising by eating at home?” Salt asked.

“Twenty-two dollars several times a week could go towards a deposit on a house.”

It has always made sense to cut silly spending when saving for a life goal. But let’s see how the advice stacks up today.

First option: smashing your avocados at home.

A Bunnings hammer can cost as little as $4.99. Then get a loaf of grain bread from the supermarket for $5, some feta for $3, three avocados for $4 and you can smash away for $12 a week; $54 less than three cafe versions.

Giving up a daily $4 takeaway coffee adds another $28 to your savings and you’re $82 better off a week. Saving $82 a week will get you a house deposit in 1975 weeks. That’s just 38 years!

Not soon enough? Next try giving up breakfast altogether.

A year’s worth of $22 breakfasts is $8000. Add lattes, and you’ve saved $9500. Only 17 more years for a deposit.

Still no good? Time to bring out the big guns. By giving up three meals a day, living only on oxygen, tap water and the desire to own a home, you could save $66 a day.

Sure, it might be hard come dinner time. But at your current rate of saving, you’ll put aside $25,000 for the year. Go without food until 2028 and there’s your deposit.

I’m being facetious, but it’s clear it’s extremely difficult to save a home deposit from scratch.

It was in 2016 as well, when smashed avocados began trending.

Boomers may roll their eyes about frivolous spending, because it’s cheaper to make repayments today than it was 30 years ago.

If you were paying off a $100,000 loan with an interest rate of 18 per cent in 1990, you’d be paying $18,000 a year in interest – about twothirds the average salary.

Today, a $544,000 loan at 2 per cent costs around $10,000 a year in interest – about onesixth the average Aussie wage.

But the pain now is in getting together a $136,000 deposit, plus $36,000-odd in stamp duty and other upfront fees; especially with banks offering 1 per cent interest on savings accounts. The biggest barrier to property ownership has become entering the market.

Each generation has done it tough in their own way. But back then, giving up the occasional flash meal might help you get a house deposit.

Nowadays, it would take you a lifetime, which is why so many must dine out at the bank of mum and dad.