I was recently quoted in an article in the Minneapolis Star Tribune about a subject near and dear to my heart – food! The article, Millenials are Becoming the Foodie Generation, is about the growing tendency of millenials to be very passionate about what and where they are eating.
While I would argue that this is far more than a generational phenomenon, millenials pay more attention to their food and dining experience (both at home and out on the town) than any generation ever has in their 20’s and 30’s. This has, in turn, led to an explosion of new restaurants promising a unique and vibrant scene, along with dozens of farmers markets and grocers that focus extensively on locally sourced and organic foods.
The danger of this lifestyle progression is that many millenials refuse to make these necessary trade-offs. A recent New York Times article titled, Younger Generations Lag Parents in Wealth Building, explains that the average millenial has less wealth accumulated than their parents did at the same age. While there are no shortage of articles about this blaming everything from mounting student loan debt, to the housing collapse, to unemployment and underemployment rates among this generation, the simple reality is that lifestyle inflation from generation to generation has greatly outpaced wage growth.
Virtually any foodie will acknowledge that healthier ingredients for cooking, or a better dining experience out on the town comes at a cost. One of the millenials interviewed for this article states that he spends as much as 20% of his income on food. While that number may seem ridiculous at first glance, the average household spends 11% on food today, but spent nearly 17% in 1984.
There is nothing inherently wrong with choosing to spend like this as long as you are honest with yourself about whether you can really afford it. Unfortunately, we often seek ways to rationalize these decisions rather than objectively assessing them.
I was contacted to comment on the article because one of the consistent themes the author was hearing from the young folks he spoke with was the importance of health in the millenial generation. In short, the belief among some members of this generation is that the increased cost of eating out at restaurants that use better ingredients, and buying better and healthier foods to cook at home will yield greater savings on health care costs down the road.
The reality is that many folks believe this to be true simply because they want it to be true. Heck, I want this to be true. They want to believe that they are making smart decisions and this chain of logic supports that. And further reinforcing this belief is that it may actually be factual as stated. However, the problem with making assumptions like this is that it completely ignores several other variables that will more than offset any hypothetical future health care savings.
On one hand, every dollar saved and invested today is worth far more than a dollar saved tomorrow. I know, I know. Savings accounts are paying nothing and the market is rigged. But savings accounts are a horrible place to invest long-term money, and if you think the game is rigged, play a different game.
On the other, if you spend more on lifestyle today, you are unlikely to ever change that, so even if you save some health care costs down the road, some of it will be offset in the future by simply continuing to spend the same way. If there is any excess savings year-to-year, you are going to have an exceptionally high financial hurdle to overcome for the 30-40 years of extra spending along the way.
Finally, as quoted in the article,
“It is very easy to rationalize [that] eating healthier leads to reduced health care expenses later in life,” said Joe Pitzl, a certified financial planner with Edina-based Intelligent Financial Strategies. “However, under that same ideology, one should probably reason they are going to live longer, as well, requiring a larger asset base to retire on. That actually requires them to save more — not less — as the additional savings needed to live a few more years is likely to exceed health care savings.”
I will be the first to admit that I am far from the poster child of health. As wanna-be foodies ourselves, the consumption decisions my wife and I make are less about eating healthy and more about trying interesting things (the bottle of wine or craft beers that accompany the meal are a dead giveaway). And while I certainly eat much healthier today than when I met my wife six years ago (and getting better by the day), we certainly do not believe it will save us money in the long-run.
The counter-argument I would make, however, is that a healthier lifestyle is likely to result in a better overall life, higher energy levels and greater all-around productivity in society. In theory, that may lead to greater financial rewards, but I am certainly not counting on that.
At the end of the day, the choice to eat better and healthier is a decision you are making to live a more full and vibrant life. That context should be justification enough as long as we realistically balance our needs and wants today with our needs and wants tomorrow. We often attempt to rationalize our spending decisions as good financial decisions, but they don’t always have to be…we just have to be sure we can afford them.