If you ask my fiancée what my favorite food is, she won’t hesitate to answer. It’s avocados. I make a large bowl of guacamole on almost a weekly basis. So when articles are written saying avocado toast is the reason why millennials aren’t saving for retirement, I take offense.
Avocado toast has a bad reputation with personal finance writers, as it is an expensive choice for brunch. They may have a point. There’s likely going to be a time in your life when you need to cut back on expensive brunches and put that money toward other priorities--like paying down student loans or establishing an emergency fund.
What about when your finances are in order? My preferred way of budgeting is to pay myself first. That is, the first thing I do with my paycheck is max out my retirement savings and automatically send money to my other financial goal accounts. After those goals are on track, I am free to spend the money that is left over. Whether I want to spend that money on avocado toast or at the movies, the choice is mine. I feel this to be a more liberating way of managing my monthly cash flow, instead of optimizing down to the last penny.
Seth Godin’s recent blog post on avocado principles inspired me to discuss how I see the unique relationship between avocados and your financial goals:
Plan ahead. In order to make a great bowl of guacamole, you have to plan ahead. If you wait until the day you need to mix the ingredients, you won’t find any perfect avocados at the grocery store. To achieve your financial goals, you also need to plan ahead. When it comes to saving for retirement, the earlier you start the better.
Be patient. If you cut into an unripe avocado, it’ll be hard and won’t taste good. You have to be willing to wait an extra day or two for it to be just right. When you are on the verge of achieving a financial goal, don’t jump too early. Your last few working years prior to retirement are likely to be your highest earning years. This can be critical to the success of your financial plan.
No shortcuts. When making guacamole, don’t put the ingredients in a blender and make the dip perfectly smooth. Take your time to carefully mix them together to get a chunky masterpiece. Investing is the same--there are no shortcuts. If an investment opportunity sounds too good to be true, it probably is. Make decisions based on research and invest for the long-term.
Just buy more. Guacamole is a hit at every party, and you don’t want to run out. Buy more avocados than you think you need to ensure everyone gets a bite. When planning for retirement, it doesn’t hurt to save more. For each year you’re in retirement, it will become more difficult to earn income. You want to have an abundance of retirement income to make sure you don’t run out.
Spread the love. Since you have an abundance of avocados, share it with your neighbors. The act of making food and sharing it with others goes back to the beginning of time. You can do the same with your retirement income. Develop a charitable giving plan, take your loved ones on vacation, and leave money to the causes you want to support. After all, you can’t take money with you when you’re gone.