finance

Nicole wanted to save 25k for a house deposit. It quickly exposed her "fair-weather friends".

When Nicole Haddow hit 30, she got a harsh reality check. After living it up in her twenties, as one does, she found herself broke, in serious debt and living back home with her parents. In her new book, the hilariously titled Smashed Avocado, Nicole explains how she transformed her financial position and managed to crack into the property market. This is Part Two of her story.

You can read Part One – in which Nicole gets the long-awaited financial reality check she needs –  here.

When one person says, ‘You know what, I’m actually going to start saving,’ just watch the friendship dynamic change. It’s like when your mate says they’re going to stop drinking.

As soon as I started serious saving, this is how conversations about upcoming events would go: ‘Nah, I’m going to pass,’ I’d say. ‘Are you serious? You can’t miss this,’ my friend would respond.

The Barefoot Investor shares his number 1 money saving tip for single women. Post continues below.

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The problem was this happened every week. There was always something I absolutely had to go to. ‘You won’t meet anyone if you stay home,’ my friends insisted. I didn’t want to be alone, but if I was really going to reach my power-save target I couldn’t go out all the time. Clearly I either needed to get comfortable being on my own or find friends who were prepared to do cheap nights in together. If I continued to go out for $300-plus weekends, I’d be ruined.

The hardest thing about saving isn’t the actual saving. If we all agreed to do it together, we’d be loaded. The awful part is having people who aren’t ready to do it themselves fight you every step of the way.

When you tell your friends that you’re going to stop spending, what you’re really saying is, ‘I can’t be your wing person when you want to go out.’ It’s probably going to put pressure on your friendships. When one person in a friendship stops spending so much, the other person might feel vulnerable because it shines a spotlight on their own spending habits. My friends kept asking me to come out for a while. But eventually the text messages stopped.

It’s sh*t. It hurts, and it takes a lot of strength to realise that if people don’t support your goals, they’re fairweather friends. If they’re not there when you start saving, they’re absolutely not going to be there when your kid’s teething, your partner’s driving you up the wall or your mum’s seriously ill. Good thing you worked it out now.

I know I could have gone out and said no to the drinks, but I wasn’t moving in circles where moderation happened. Ever. Being the sober one is no fun when everyone’s spinning around the dance floor and going back to a friend’s house to drink more until dawn.

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Instead, I got strong. I had a goal I was working towards. That’s not to say I never went out. I’d have a drink or two on occasions when I could trust myself to walk away, and I still went to weddings, thirtieths and other organised events. But I wasn’t mindlessly dropping hundreds in a single night anymore. There are only so many times you can haul yourself to a cafe after an all­nighter and spend another $50 on a mimosa brunch before you say to yourself, ‘Alright, mate, enough.’

 

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So how did my savings plan break down?

I had set myself one year to power-save, so I hustled for maximum income. While the exact amount changed from month to month depending on how much I made freelancing, in an average month I made a total of $4700 after tax.

If you’re looking at this number thinking, that’s a lot, you’re right. But no matter how much you make, the principles of saving as much as you can from what you earn remain the same. Work out what you can feasibly save on your income. Be ruthless. Take out all the frivolous spending. Had I been earning less, I would have needed to reduce my spending further. You don’t need a takeaway coffee every day, and you don’t need to book an Uber when public transport is an option. Maybe you can walk or ride to work. You don’t even need a Netflix account.

Look at the cost of your housing. If moving in with your folks is out of the question, is there another way to reduce your costs? A cheaper sharehouse? Renting further out? House-sitting? As unappealing as a step back might be, it doesn’t have to be forever.

If you don’t think you can save much on your own, find a friend who has the same goal and motivate each other. If you save $1000 each per month, at the end of the year you’ll have saved $24,000 between you.

Here’s what my monthly spending looked like during the power-save year.

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First, I put $2500 per month straight into my savings account. If I did this every month, I’d have $30,000 within a year. But I knew that some months I wouldn’t make $4700. Sometimes I’d only make $4000, or I’d have a big bill to cover, so I figured $25,000 was realistic.

After my savings were deposited, I had $2200 left. The essentials totalled $1330:

$600 for board and food at my parents’ house.

$300 for my car repayment.

$250 in credit card repayments.

$80 phone bill.

$100 health insurance.

Mia Freedman talks to Nicole Haddow about cracking the property market, and starting from scratch at 30. Post continues below.

That left me $870 to spend – about $170 a week in a five-weekend month, a little more in a shorter month. It was tougher in summer and easier in winter, when going out was less appealing anyway.

I took my lunch to work every day, which meant I didn’t spend much during the week. I needed to allow for petrol, the occasional takeaway coffee and skincare products. If that left me with about $100 to spend on the weekend, I’d do something like this: a drink after work ($10), brunch with a friend on either Saturday or Sunday ($25), leaving me $65 to go out on Saturday night. If I’d opted to drop in to a friend’s, order a pizza and drink a cheap bottle of wine, I’d have enough left for a cab home. If I did something more affordable, I’d have more for the next weekend. Inevitably I went over budget some weekends, which meant the following week I bought nothing but a takeaway coffee and spent my time writing and watching TV with my parents.

I’ll be honest: some months I didn’t manage to put away $2500. But when big expenses like car registration hit, and I could only scrape together $2200, I was still on track to reach my target if I recovered the following month.

It was difficult, but there was an upside. I worked out who was on my team and who wasn’t. I cemented some of the best friendships I’ve ever had. My friends Beau and Kim had two small children and would have me over for dinner most Friday nights. We’d cook, drink cheap wine and listen to Fleetwood Mac. I slept on their futon and was often woken by their son on a Saturday morning. He’d poke me in the face and ask, ‘Cole, why are you here?’ Even in a post-wine haze, I’d smile. For about $25 I could have a great night and wake surrounded by people I loved who supported my goal.

My social life didn’t end, it just didn’t happen at bars anymore. Those who insisted on having a friendship that took place exclusively in fancy drinking holes were left behind. I need more than rounds of $12 pinot noir to feel valued, but I didn’t expect it would take saving for a home to discover who my real friends were.

This is an edited excerpt from Smashed Avocado by Nicole Haddow (RRP:$29.99) out now through Nero Books. Available to purchase online at Booktopia or wherever good books are sold.

What are you best saving tips? Share them in a comment below.

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