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Not Toast

Ross Menke  |  May 6, 2019

IF YOU ASK my wife what my favorite food is, she won’t hesitate to answer: It’s avocados. I make a large bowl of guacamole almost every week. Maybe that’s why I take offense when I read articles saying avocado toast is the reason millennials aren’t saving for retirement.

Avocado toast has a bad reputation with personal finance writers, because it’s an expensive and favorite brunch choice, especially among my generation, those born in the 1980s and ’90s. Yes, they may have a point. There’s likely 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 building up an emergency fund.

But what if your finances are in order? We’re constantly told to “pay yourself first.” The first thing I do with my paycheck is max out my retirement account contributions. On top of that, my bank regularly deducts a set amount for my other goals. After those various deductions have been made, often without my noticing, I’m free to spend the leftover money as I wish. Whether I want to spend it on avocado toast or at the movies, the choice is mine. I feel this is a less onerous way of managing my monthly cash flow, plus it means I get greater enjoyment out of the things I buy, because I know I can afford them.

Did you read bestselling author Seth Godin’s recent blog post on the avocado principles? It inspired me to ponder the unique relationship between avocados and our financial goals:

Plan ahead. To make a great bowl of guacamole, you have to think ahead. If you wait until the day you need to mix the ingredients, you won’t find perfect avocados at the grocery store. Similarly, to achieve your financial goals, you must plan ahead. The oft-repeated truth is that, 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. Similarly, when you’re on the verge of achieving a financial goal, don’t act too hastily. Your last few working years prior to retirement are likely to be your highest earning years. These last additions to your nest egg can be critical to reaching your goal.

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 by hand to get a chunky masterpiece. In investing, the same is true: 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’ll need. Along the same lines, when planning for retirement, it doesn’t hurt to save more every year than you think you’ll need. Better to have a surplus of retirement savings to make sure you don’t run out.

Spread the love. Since you have an abundance of avocados, share them 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. Take your loved ones on vacation. Make an estate plan that allocates money left over when you die to those you love. You can also leave money to causes you want to support. After all, you can’t take the money with you. Ditto for your avocados.

Ross Menke is a certified financial planner and the founder of Lyndale Financial, a fee-only financial planning firm in Nashville, Tennessee. He strives to provide clear and concise advice, so his clients can achieve their life goals. Ross’s previous blogs include Cash Is KingMore to ComePass It On and A Great Gift. Follow Ross on Twitter @RossVMenke.

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