Treatonomics: Is Your Latte Derailing Your Finances?

According to a 2025 study from Circana:

• 62% of Americans now consider little treats a crucial part of their self-care routines.
• 73% say that small indulgences are “important to their quality of life.”
• 24% maintain a budget line specifically for small indulgences.

Although many Americans deem the little treat to be almost essential, a lot of people still feel conflicted about blowing money on unnecessary purchases. In one survey from the Intuit 2026 Financial Forecast, 59% of respondents aimed to cut back on small daily purchases in 2026.

What does this tell us? Are we sabotaging our own finances with our self-indulgent spending habits?

You’ve likely heard the argument that, if millennials and Gen Z would stop wasting their money on avocado toast and other little treats, they would be able to buy homes. For some members of older generations, treatonomics is a sign of poor discipline among the youth.

Little treat costs can certainly mount up over the long term. Circana reported on how much people spent buying little treats in 2025 and found that, on average, they blew around $5 per treat—or up to $10 for bigger treats. The study also found that 44% of Americans consume little treats at least a few times a week, and over 1 in 10 buy a little treat every day.

Some say that people should be saving this cash to buy houses instead.

However, many younger people argue that there’s no point, as life has become so expensive that the money they’d save by kicking their little treat habit wouldn’t make a real difference to their financial situation anyway.

One survey from Clever Offers found that one in six zoomers (17%) say that winning the lottery seems more likely than owning a home in the next five years. One in nine (11%) believe they’re more likely to get struck by lightning.

Is this realistic, or just a bad attitude? Does the math actually support the “skip the avocado toast” advice?

If, like many Americans, you’re spending $5–$10 on little treats a few times a week, it can easily add up to $60–$120 per month or even more.

Imagine that, instead, you invest that money in an index fund, which is a fund that’s designed to mirror the performance of a particular set of companies. Many popular funds track the largest and most successful companies in the US, meaning that they reflect the general state of the economy.

Investing in this way over a long period has historically yielded a growth rate of around 7% per year (after accounting for inflation). That figure is just an average, and in any individual year, it’s possible to earn more or less or even lose money, but it tends to hold in the long term.

Based on that average, here’s how your little treat fund might look after 10 years.

Little treat costs vs. the price of a home

The median price for a US home reached $405,300 at the end of 2025. The median down payment on a home, according to the National Association of Realtors (NAR), is around 19% of the total home sale price. 1 2

On a median-priced property, that would mean a required deposit of around $77,000—more than it’s realistic to save with the “little treat” investing plan outlined above.

Buying a starter home

However, first-time buyers are often allowed to make smaller down payments. According to the NAR, the average deposit for a first-time buyer is 10%. 3

On a $400,000 property, this translates to a down payment of around $40,000, a sum that the projected savings from the little treat plan could make a much bigger dent in. (Depending on how much you save, they might even cover it completely.)

The full picture is more complicated—in some areas, real estate prices and down payments are much lower (potentially as low as $9,000–$25,000), and in expensive cities, they’re often much higher.

Still, the upshot is that it really is often possible to save enough for a starter home in a low-cost-of-living area by cutting down on little treats.

So, does this settle the debate? Does it prove that treatonomics is keeping young people from affording homes?

Not quite. The problem is that the cost of housing doesn’t stand still. To the contrary, over the last few decades, it’s gone through the roof, growing much faster than inflation, and experts don’t think this trend is likely to change anytime soon. 4

In 1970, the median cost of a home was $23,900, which translates to less than $200,000 in today’s money. In other words, housing now costs more than double what it used to, in real (inflation-adjusted) terms.

Housing prices have been outpacing inflation by about 2.2% since the seventies. At this rate, a house worth $400,000 today will be worth approximately $500,000 in 10 years’ time.

Assuming that the average deposit for a first-time buyer stays at 10%, this means tomorrow’s homebuyers will have to plunk down around $50,000. This is just barely within the upper limit of the savings possible with the strategy we described earlier—if you save $290+ per month—and it doesn’t account for some of the other rising costs we’ll look at below.

Lagging wages

A graph of the US’s average home price–to–income ratio over time shows that wages failed to keep up with house prices between 1990 and 2022. That’s bad news for prospective buyers, at least if the trend continues.

Increasing rent prices and other surcharges for adulting

Rents haven’t increased as fast as real estate prices, but they’re still painful.

According to a 2025 ConsumerAffairs report, the real cost of rent has surged 54% since 1973. This means it has now become harder for savers to accumulate the amounts they would need for a deposit. 56

On top of that, other costs have either skyrocketed or emerged as brand-new requirements for participation in modern life:

• Education: Between 1970 and 2023, the cost of college more than doubled in real terms, rising from roughly $6,139 to $15,868 per year.7 What’s more, because few people have $16,000 a year sitting in a drawer, most graduates are now forced into the loan system, with debt that often grows faster than they can pay it off.
• Healthcare: In 1970, the per-capita cost of healthcare (in 2024 dollars) was around $2,208. By 2024, the cost had shot up to $15,474.89 Because insurance coverage has failed to keep pace with these prices, medical costs—like education costs—have escalated and become major debt liabilities.
• Shadow utilities: In 2026, it’s almost impossible to work without paying for high-speed internet, a cellular data plan, and sometimes cloud storage, software and app subscriptions (e.g., Microsoft 365, LinkedIn Premium, or Adobe), and other fees. Internet services cost $58 per month on average, and cellphone expenses come in at around $113 per month. 10

Like rent and housing, these costs seem unlikely to stop increasing.11121314 It’s perhaps unsurprising that, faced with so many financial obstacles, people tend to give up on budgeting.

This often marks the beginning of a vicious cycle known as “doom spending.”

Doom spending, a close relative of doom scrolling, involves prioritizing small, immediate rewards that make it possible to enjoy the present, even if the future looks hopeless.

One study from Intuit Credit Karma found that 27% of Americans admit to doom spending to cope with stress. The proportions are even higher among zoomers (37%) and millennials (39%).

This pattern is exacerbated by something called “behavioral engineering,” which involves the use of marketing tools that nudge people into spending.

Examples include:

• Social media: Social media not only suggests goods and services to buy, it evaluates users’ behavior in real time (e.g., tracking how fast they scroll and where they pause on their feeds) to find the exact moment their willpower is at its lowest. Put another way, by the time you open TikTok or Instagram, AI is already calculating which ads will break your resolve and trigger a purchase.
• Cashless payments: Handing over physical money forces people to feel the loss of their cash. However, with biometric face ID and saved card details, they don’t even have to reach for a wallet to make a purchase.
• Frictionless spending: Similarly, systems like one-click ordering or Amazon’s “Just Walk Out” tech make everything so quick and easy that, by the time your logical brain kicks in, the transaction is already over.

Debt traps and the normalization of debt

Debt traps are a type of behavioral engineering that predate the digital era. Because we’ve been raised to think of debt as normal, these traps make it easy to overspend.

We’ve already seen how much tuition fees have grown in recent years, and student debt is arguably one of the gateway drugs to debt normalization. Most students now leave university with tens of thousands of dollars of debt. Once people are comfortable with five-figure student loans, smaller debt traps feel like nothing.

Debt among US households

The Federal Reserve tracks the nation’s household debt payments as a percentage of disposable income. Their statistics from the third quarter of 2025 found that the debt payment-to-income ratio was 11.3%. That means the average American was spending about 11% of their monthly income on debt payments.

These statistics include student debt, along with credit card debt (which many Americans now use for basic survival purchases, such as groceries and gas), auto loans, personal loans, and mortgages.

The real percentage probably exceeds what the Federal Reserve reports, since their data often misses the “shadow debt” many people are accumulating in the background. One example of this is Buy Now, Pay Later.

Buy Now, Pay Later

Buy Now, Pay Later (BNPL) is a fintech-engineered alternative to credit cards that allows you to split purchases into smaller installments that you pay over several weeks or months.

On the surface, BNPL looks like a convenient budgeting tool. However, it often functions like a smoke screen that allows people to kid themselves about how much they’re spending.

If you have a huge student loan, for example, the comparatively trivial debts of BNPL can seem almost invisible. It’s probably unsurprising, then, that installment-based spending appears to be on the rise. 15

Research from American financial services company Empower shows that BNPL is now used by around 48% of millennials and 40% of Gen Z.

Other market research shows that as of 2026, 25% of BNPL users have used the service to buy groceries—a figure that nearly doubled from 14% a year prior. For Gen Z, one in three now uses BNPL for food. 16

The idea of paying for your burrito in installments is almost a standing joke, but for many American consumers, it’s now a reality.

It’s easy to dismiss the complaints of struggling zoomers and millennials as whining, but the data—from the housing mirage to the debt burdens they face—suggests that the game really has changed for them.

Meanwhile, behavioral engineering creates a feedback loop where economic anxiety drives young people to their screens and the apps offer spending as an immediately accessible form of relief.

When the cards are so stacked against ordinary Americans that big goals like homeownership or true financial freedom prove to be out of reach, it’s easy to understand why there’s little incentive to save.

Seen through this lens, treatonomics doesn’t look like a lack of discipline. It looks more like a strategic trade-off or a survival tactic.

If people can’t buy houses, they might as well enjoy today. After all, living without lattes for 10 years might seem like a bleak prospect if that $7 treat is the only thing keeping you going.

The line between healthy spending and fiscal irresponsibility

This, of course, doesn’t mean that it’s always a good idea to buy little treats without thinking about your financial future.

If you can divert some of your little treat budget, as we’ve seen, you could save tens of thousands of dollars over the course of a decade. The more savings you have, the more leverage you have. An emergency fund of $10,000–$50,000 could rescue you from a dead-end job or a predatory landlord—or make at least a dent in the down payment for a house.

A little treat might provide the dopamine fix that makes your week more bearable, but a cash cushion will give you more long-term control over your future.