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Avocado wars: enjoy your brunch but earn earlier

Home-buying debate is muddled by focusing too much on brunch.

Bernard Salt's argument that millennials cannot save a house deposit because they waste money on fancy breakfasts deserves to be challenged. This silly proposition is based on generalisations and misses a bigger problem: lack of income.

As an aside, social commentator Salt could have chosen a better example than avocado on toast to make the case that millennials are poor savers (which is not backed by research). How many twentysomethings ruin their finances through crazy car purchases or excessive overseas travel?

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More debate is needed on the income side of the equation. I fear that too many millennials take too long to get going in their career and sacrifice years of potential earnings.

This may be by circumstance: a shortage of graduate jobs, youth unemployment and record-low wages growth, for example. Or by choice: millennials losing too much work time to "gap years" for travel after school, changing university courses or quitting jobs too easily.

Consider those who take a year off after school to travel the world. That's probably $30,000 in lost after-tax wages and travel costs, assuming one could get a job. That's a lot of smashed avocados on toast and a handy deposit on a one-bedroom unit if invested well.

Then there's the millennials who spend longer at university than they should. Unsure of their favoured career, they flip between courses, drop out or fail too many subjects. I encountered hundreds of students who fitted that description while lecturing at university.

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That extra year at university might cost $40,000 in course fees, interest and lost wages later in their career. Sadly, not enough students think like this: they see university fees as a problem for their "future self" and rarely consider the opportunity cost of poor education decisions.

What of the millennial who flips jobs every 12 months. They tire too easily of their work, lack resilience or have unrealistic expectations of their employer. Rather than climb the career ladder, they keep slipping on rungs and damaging their long-term earning prospects.

Yes, we can debate housing affordability, millennial spending patterns and low-wages growth all we like. But what matters most, at least at the start, is millennials kick-starting their career earlier, moving faster towards their peak earnings and staying there longer.

I know what you're thinking: this argument assumes every millennial who wants a job can find one and that those who are underemployed for the first half of the 20s choose this lifestyle. Or that I, too, am generalising about all millennials starting their careers later.

Let me be clear: the mountain for millennials is much higher than for my generation (X). Unfairly higher. But giving up on property (and by default, investing) is not the answer. Avoiding home ownership will mean poverty for many millennials later in life. The best response is starting the climb earlier.

This is not just the responsibility of millennials. Parents, schools, career counsellors, universities and employers all have a role in encouraging and helping millennials to kick-start their careers earlier, or find more productive uses for their talents between jobs.

Let me be clear: the mountain for millennials is much higher than for my generation (X).

It shouldn't be about millennials engaging in excessive penny-pinching to save money and being miserable. It's about finding a better balance where more millennials focus earlier on their career, build something for the future and still have a good lifestyle.

This trend needs to start in their teens. I recall my first job at age 15 as a Woolworths grocery packer – a torturous job that involved cleaning blood from the meat cabinet on weekends (a task that still scars me!). Working Thursday nights and Saturday mornings, and saving most of your pay, was the norm for my class. How many parents these days insist that teenagers have part-time jobs?

Schools need to have stronger financial literacy programs for students and incorporate latest job-market trends into their presentations. Some schools do an excellent job in this and there are some terrific presenters who help kids understand basic finances. But so much more needs to be done to improve financial literacy among school-leavers.

A better understanding of the financial challenges ahead and labour market trends would surely encourage more millennials to start earlier in the workforce – not just in part-time jobs, but building the foundations of their long-term career. Every month or year out the workforce, by choice, magnifies the savings and property challenge.

Specialised financial advice for millennials – a trend that is slowly taking hold – is needed. A financial adviser should be part of any self-respecting millennial's entourage. Growth in automated "robo-advice" makes such advice more feasible.

Career counsellors, too, have a bigger role. I'm not close enough to school career counselling services to comment on the quality. But I see a lot of millennials who have still not chosen their initial career after years at university. Something is wrong: we need to help millennials form a much clearer picture of their preferred career so they start earlier.

Universities are also part of the problem. Excessive course enrolment and a lack of comparable, simple data on course outcomes contributes to students making poor education decisions and sometimes wasting years at uni – problems The Venture has covered previously.

I would like to see more universities condense undergraduate degrees even further, and expand their online course offerings. It's happening but not fast enough.

Why can't students do a three-year degree in 18 months if they are capable of it, and get more of their course instruction online? That alone would give students extra time in the workforce and less time wasted attending or travelling to outdated lecture formats.

Employers, too, could be flexible in their graduate hiring approach. More students should be working full-time and studying part-time along the way through company internship or cadetship programs – a model that worked well in the past. That has to be better than years of study upfront for jobs that may no longer exist, at least in some professions.

A better mix of skills is also needed. Greater focus on entrepreneurship education at school and university – a passion of this blog – would give millennials the potential of creating their job if they cannot successfully apply for one, or doing something between jobs to keep earning income.

Blending tertiary and vocational education is another option. Why is it always one or the other? Why can't more students complete a university business degree and earn recognised qualifications in vocational skills, such as for the hospitality industry, along the way? Skills that will be invaluable during career gaps in their chosen profession.

It's not about tertiary education being better than vocational education, or self-employment being better than corporate employment. It's about giving students as many options as possible so they can pivot when confronted by labour-market brick walls and keep working and earning.

Yes, starting earlier in careers is a complex issue and is only part of the solution. The problem needs to be attacked from multiple angles: better housing supply, fairer taxation incentives across the generations, and making it easier and cheaper for millennials to invest.

Cutting out fancy breakfasts – something many of us can do, from time to time – won't solve the problem. It just muddles the real issue about too much time being wasted, and too much income being lost, before careers are started.

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