For many young people, cutting back on little luxuries will not make property ownership a reality. But what can a spending diary – and advice from Britain’s most famous money-saving expert – reveal about one millennial renter’s life choices?

Can you really save for a deposit by ditching coffee and avocado toast? I tried to find out​

Can you really save for a deposit by ditching coffee and avocado toast? I tried to find out​

At 26 years and 10 months old, I am squarely a millennial. I have had four jobs in five years. I am flummoxed by fabric softener. I sometimes take my phone into the bathroom. And I doubt I will ever own my own home. Not because I want to rent for ever – I want too many dogs for that – but because, like so many people my age, I can’t imagine being able to afford it.

House prices have grown faster than rents and incomes, moving far beyond what is considered affordable, especially for twentysomethings. The only people my age I know who have bought a house have done so outside London, as part of a couple, with help from their parents or all three. But you wouldn’t know that from the commentators who argue that a deposit would be within the grasp of all millennials – if only we would cut back on takeaway coffee and avocado toast.

Beyond the last £8,000-odd to pay off on my student loan, I am debt-free. I earn considerably more than the national average salary of about £27,000 (and about in line with the average for London). I am undoubtedly in a privileged position, especially for someone my age.

But I find the argument that I could afford a house simply by going without luxuries for a few years hard to swallow when the average deposit for first-time buyers is £32,899. In London, it is more than three times that: £106,577. But I have decided to test my assumption that, as a single twentysomething committed to living in a major city, I will never be able to buy a house.

I will record all my spending for a month, then the money-saving expert Martin Lewis will assess the results. I call him the day before I start my diary exercise to discuss. (The same day I buy a £100 Taylor Swift ticket – not a coincidence, but not the most expensive seat available, either.)

Lewis tells me that the issue of unaffordable housing is not as simple as splicing it along generational lines. “There are those young people who are managing their money so badly that they can’t afford property, then those who would never be able to buy without help from the bank of Mum and Dad.”

Facebook Twitter Pinterest That will be £625 a year ... Elle Hunt and her money-saving vice, posh coffee. Photograph: Graeme Robertson/The Guardian

On one point he is firm, however: while it is possible to be approved for a mortgage with a deposit of only 5%, to be able to truly afford a property I need at least 10%, ideally 20%. “But that’s a very difficult amount to save when you’re already paying rent,” he says. “Where do you live?”

South London, I say, in an ex-council flat I share with one flatmate; we each pay £765 a month in rent and heating.

“What would a one-bedroom flat cost to buy there?”

Approximately £350,000, I say.

“What do you earn? I presume you’re going to be saying that in the piece; you can’t do it without.” I tell him: between £35,000 and £40,000, which according to Glassdoor is about average for a journalist.

“There you go!” says Lewis. “Piece is over. You won’t get a mortgage, full stop – I don’t care what you spend. It is going to be virtually impossible for you.”

Then a thought occurs to him. “Do you have a partner?” Nope.

“Certainly, by yourself, you’re not going to get a mortgage for £350,000,” he confirms. But even if a house is not in my foreseeable future, Lewis says, I should still be focused on saving. “You’re 26, you’re single, you’ve got no kids, no partner,” he says. It sounds a bit depressing. Lewis adds: “You might not think it, but this is actually a good financial time for you.”

With no dependants and few large expenses, I will probably be able to bounce back from any adversity, he says, but that may not always be the case. “Life changes, so this is a good time to save, whether it’s for a property or not.”

Convinced that my own home is out of reach, I have resigned myself to spending for the now

I see his point – but I realise, with a sinking feeling, that it is far from the approach I have been taking. After rent, heating, electricity, groceries, internet, mobile phone and public transport costs, I am left with a bit over £1,000 each month. Of that, I save about £100 every month. The rest goes on, mostly, coffee, food, alcohol and travel.

Convinced by damning house‑price-to-income ratios – 7.6 in England and Wales; more than 14 in London – that my own home is out of reach, I have resigned myself to spending for the now. In such a grossly inflated property market, any question of reducing expenditure cannot help but seem by-the-by.

This is not the right attitude, says Lewis. He wants me to understand “opportunity cost”: the long-term loss that results from spending your money on option A rather than option B – in my case, spending £4.50 on lunch, rather than my future first-home deposit.

“In simple, homespun terms, you can’t spend money twice,” he says. “Let’s take something trite – do you buy coffee at a coffee shop?” Yes – at least one every workday.

“At least?” I don’t dare tell him that I recently started going out of my way to a new cafe near work, where the flat whites taste marginally better than at Pret and cost 45p more.

“That’s £625 just from your coffee,” Lewis points out. “We haven’t looked at anything else!”

It is arguably “a perfect life choice” if I feel I am getting my money’s worth, he says. “But if you spend 625 quid a year on coffee and then say: ‘I can’t save up for a deposit on a house,’ you’re starting to lose a bit of the moral argument.”

I am starting to worry what else this spending diary will reveal.

Bus then tube to work £3.90

Coffee from new cafe £2.80

Lunch from work canteen £4.50

Downpayment on a gym membership £70

Tube home £2.70

Dinner out £15

Snack on the way home £2.20

Total £101.10

I have managed to avoid including the Taylor Swift ticket, but this is not an auspicious start, what with the list including the most expensive flat white within half a mile of the office and two out of three meals eaten out.

An old friend is staying with me and we want to try the Chinese restaurant that was booked up on his last visit. Then, on the way home, we stop at the local Turkish supermarket and the Wafe Up biscuits my flatmate and I like are four for £1.10 and, well, here we are.

I may live to regret the Gymbox membership, but I have learned that scrimping on a gym means I do not go. If I experience a flutter of alarm every time the direct debit goes through, I will make the effort to bring down the cost per visit.

Tube to work £2.40

Coffee £2.80

Tea from work canteen 50p

Power bill £73.19

Round at the pub £12.45

Dinner and a third of a bottle of wine £19

Tube then bus home £3.90

Total £114.24

Not an auspicious day four, either, although it starts well. For the first – and only – time during this exercise, I bring my lunch in from home and feel smug about it. Then my resolve slackens and I find myself at the pub, then at Honest Burger, splitting a bottle of sauvignon blanc.

Still. At least my flatmate will pay me back for half the power bill.

Bus then tube to work £3.90

Coffee from Pret (economising in action!) £1.95

Lunch from work canteen £4.50

Cash lost in drunken haze at work Christmas party £20-£30

Round at Shoreditch House £20

Total at least £50.35

Scrabbling around the floor of the Big Chill in King’s Cross for the £20 (or was it £30?) I am sure I put in my bag with the broken clasp, I think back to Lewis’s “opportunity cost judgment”. All well and good – but what about when your judgment is impaired?

A few hours later, at Shoreditch House, I pay another £20 – twenty pounds! – for two gin and tonics. That sobers me up.

Bus to work £1.50

Coffee £2.50

Tesco sausage roll £1

Fizzy drink £1.40

Rent and heating £765

Council tax £97

Lunch from the greasy spoon £7.40

Tube home £2.40

White chocolate Magnum from the corner shop £2

Total £880.20

The day after the Christmas party, at work, at what might euphemistically be termed a low ebb, I am mostly focused on how demoralising it is to keep a spending diary. Then it hits me: this is what Lewis meant. You could not pay me to go back to Shoreditch House, but I would have paid twice what I did for the cheese omelette and Coke at the caff round the corner the day after and it would still have been good value.

As for the Magnum, enjoyed in the bath – I have never known such pleasure for £2. This feels like a breakthrough.

Total £0



The trick to saving money, it seems, is not to leave the house or go online.

Tube to town £2.40

Sale top from & Other Stories £34.50

Full-price dress from & Other Stories £59

Gym leggings from TK Maxx (new year, new me!) £16.99

Supermarket snack after gruelling experience of Regent Street £3.28

Tube then bus home £3.90

Bus to party (taking me up to the daily fare cap) 30p

Booze to take to party £11.39

Total £131.76

I am informed that a single man is going to be at that night’s party, necessitating a second trip to & Other Stories

My plan for a relaxed New Year’s Eve with friends is thrown into chaos when, midway through a mooch around the Regent Street sales, I am informed that a single man is going to be at that night’s party, necessitating a second trip to & Other Stories to buy a dress in a blind panic.

Lewis was unequivocal that my path to home ownership would be much easier as part of a couple (“And if they have rich parents, you’re laughing all the way”). This is an investment, I reason, just like the £181 haircut and colour on day six.

As it is, I end up wearing the new top with an old skirt and return the dress three days later for a refund. Lewis later clarifies, sounding a bit alarmed, that a partner is not a financial plan: “I would not be finding someone just so you can get a house.”

Tube to work £2.40

Coffee from work canteen £1.60

Lunch out £14.10

Uber from work to restaurant £10.35

Dinner out £17.92

Bus home £2.40

Total £48.77

A shockingly expensive day – grotesque, really, in its lavishness. And a Monday! Through poor planning on my part, two overdue catchups with friends fall on the same day – and at more expensive joints than I would usually plump for. Yet, the only expense I regret is the Uber I call when it becomes apparent I am going to arrive unacceptably late.

Both meals are delicious and the company delightful, helping to ease the deflating feeling of the first full week back at work. And, over dinner, it occurs to Sophie to set me up with her friend, a neuroscientist who has just bought a house and is “looking for someone to share it with”.

That £18 at the Begging Bowl in Peckham may yet end up being the best money I have ever spent.

***

Calling to discuss my spending diary, Lewis says he has two big-picture observations. The first is that it gives only a fractional view of my finances, focusing on my daily outgoings for a small window of time. If I want to make “pain-free savings”, I should check I am getting the best deals on electricity, internet, phone and other recurring expenses.

“The second thing,” he says, “is that this is not the spending diary of someone who is looking to save money.” To be fair, he adds, I had said as much when we first spoke.

However, on the basis of my salary and my spending, Lewis believes home ownership is within my grasp – even outside a relationship. I am astonished. Scanning my spending diary, he says it would be “very possible” for me to save from £400 to as much as £700 of my disposable income each month by cutting back on coffees, lunches out, rounds at the pub and holidays. “Let’s be blunt: you do not need a money-saving expert to tell you that.”

This is not the spending diary of someone who is looking to save money Money-saving expert Martin Lewis

Saving between £4,800 and £8,400 each year – hopefully more, if my salary increases in the future or I find someone to go halves on a house with – I could reach a 10% deposit of £35,000 in between four and eight years, says Lewis. “And the sooner you start, the sooner you’ll get there.”

But I have to want it, he continues. He has pages of evidence that I do not. “The most telling point in the whole thing, for me, was this line: ‘Brought lunch in, felt smug about it.’ If you were deliberately saving for a house, that would be habitual. It would not be smug.”

I see his point: if I had brought in my lunch every day over the four weeks, I could have saved about £90, minus the cost of groceries. This is the secret of “the golden numbers”, says Lewis: 365 days; 52 weeks; 12 months; 250 workdays. Savings build up with consistency over a long time. Spending £4.50 every workday on lunch from the canteen? That is £1,125 a year. If I were billed for that amount annually, Lewis says, I might be more motivated to bring down the total.

“And: ‘Losing cash in a drunken haze’ ...” He makes a slightly strangled noise. “That’s a particular sin, regardless of your finances.” Ironically, I had only withdrawn cash to prevent myself from overspending on cards.

“I think the classic problem with you,” says Lewis, not unkindly, “is that you talk about efforts to save money, but I don’t think you’re persuaded in your head of the reason for doing it. If you want to do this, you need to make that decision in your head and start to live your life – as the focused, ambitious person that you are – with one of your ambitions being to save a deposit for a house, so that you actually get a kick out of the fact: ‘I’ve brought in sandwiches to work for two months. I’ve got this much extra money. Boom!’ You need that mentality and you don’t have it.”

I feel a bit ashamed, not least because I am the exception to the rule: for me, if not most millennials, Lewis is suggesting it really is a matter of cutting down on the avocado toast.

“The problem with being 26 years old is that the years creep away from you,” he says, ominously. It is feasible, I suppose, that my future self and her many dogs will wish I had spent less at cafes and more on a property to house them.

“Maybe the best thing to come out of this article is that you sit there, take a hard look at yourself and work out where you want to be. If you want that house, you say: ‘You know what? Screw it. I’m going to have to change my ways.’ You’re not a kid any more.”

Reader, I bought a cafetiere.

Rent and other recurring expenses £1,107.19

Groceries £136.70

Public transport £122.60

Workday lunches £85.19

Other eating out £136.60

Tea and coffee £47.50

Alcohol £113.02

Clothes £191.48

Holiday £213.87



No-spend days: two

Most regrettable expense: £5 lost bet to a friend

Biggest night out: £44.34 (including the bet)

Biggest expense: £181 haircut and colour (not worth it)

Biggest impulse buy: £69.99 trainers from Office

Best return on investment: £3.75 pub quiz winnings from £2 entry