Go Ahead and Eat the Avocado Toast … Assuming You’re Doing Everything Right

How many times have you been smugly informed that your generation sucks? To be more specific, that millennials are irresponsible and all financial challenges you face are a result of your foolish addiction to avocado toast. If you weren’t so self-indulgent, then you’d be financially secure by now!

It’s a lot to put on a fruit, even one that’s so extraordinarily delicious — and healthy to boot!

As a financial advisor with more than two decades of professional experience, I’m here to tell you that it’s okay. You can eat the avocado toast and you don’t have to feel bad about it. Some small pleasures deliver a solid value that exceeds their cost.

BUT… to enjoy your tasty avocado treat with a clear conscience, financially speaking, you must also be attending to six critical steps that actually are responsible for your long-term financial security:

1. Figure out monthly expenses and track spending. First, relax. We’re not talking about a budget. What you need is an accurate understanding of exactly how much it costs to maintain your current lifestyle, complete with avocado toast. Why? So you have a realistic metric to inform your savings strategy and aren’t flying blind when pondering a new career opportunity or handling an unexpected job loss. It also lets you identify areas for strategic spending cuts if you want or need them for any reason.
2. Fund an emergency savings account. You must have an emergency account. Fully funded, it should have enough to cover your expenses for 3–6 months (see step one). Later on you’ll want to increase that to 6–12 months, but right now you have other financial priorities. This account will save you from expensive and embarrassing situations, like having to borrow money at a high interest rate when you need car repairs, or your job disappears without warning.
3. Contribute to your 401k at work at least enough to get the maximum company match. If you’re smart enough to make toast, you’re definitely smart enough to collect free money. Participating in your company’s retirement program and contributing enough to earn the full amount of any match offered by your employer is a no-brainer. This is so important that you need to do it even if it means cutting back on daily spending. DO. IT.
4. Start a Roth IRA and make regular contributions, even if they’re small. I know, it’s tough to contribute to an IRA when you’re not making a ton of money yet, especially when you’re already contributing to a retirement plan at work. But this is another one where you just have to do it, even if it creates some budget inconvenience. Between the power of compound interest and the fact that the withdrawals from this account will be tax-free (assuming you follow the very accommodating rules), you simply can’t afford to miss out on this opportunity. Plus, you can pull out contributions earlier if you need to.
5. Get adequate life and disability insurance. You’re young, healthy and invincible. Guess what? You still need the insurance. No, really, you do. And it won’t cost much now, since you’re young and healthy. But should an unfortunate event befall you and leave you unable to work for a while — or worse, forever, you will be SO GLAD you have this type of coverage. And if you die? Okay in that case you may or may not be glad you had the foresight to buy insurance. Get the disability insurance first, maybe?
6. Invest in continuing education/self-improvement to build professional and personal skills. Yup, investing in yourself is right up there as a financial priority. YOU are your biggest asset and the crucial element in your earning power, so always be adding to your skill set. Doesn’t matter if it’s for your current job, a different one you’re considering or something related only to personal growth, it’s still legit and important.

Each of these six key financial moves is imperative to get you started on the path to financial security and keep you moving forward. As long as you’re addressing them, I encourage you to ignore any criticism designed to make you feel bad about how you choose to spend your money. Treat all six as the urgent priorities that they truly are, and you can enjoy many happy years of avocado toast while simultaneously ensuring your future ability to indulge in pleasures you’ve yet to discover.