Name: Sharon Newman

Age: 24

Occupation: Cabin crew member at British Airways

The Problem: Sharon and her partner Andy have just bought their first home near her work. Now that much of the process, involving legal fees and other expenses are out of the way, she and Andy want to get things back on an even keel, start to plan their finances, calculate their incomings and outgoings and prepare for any future needs.

The Advice: Don't do things on an individual basis. See retirement planning in conjunction with investment, protection and every other issue.

Sharon and Andy, a self-employed shop-fitter, have just moved in together in their home a few miles from Heathrow Airport. They have a joint income of around pounds 42,000 and Sharon feels now is the time to sit down and organise her financial affairs.

She originally found it difficult to obtain a mortgage because more than half her total income is made up of bonuses, shift and overseas allowances, and because of Andy's self-employed status. Eventually Halifax stepped in with a rate of 7.35 per cent fixed for five years. While this may not be the cheapest around, it carries no redemption penalties, allowing early repayment of the loan, or compulsory insurance purchases, which usually add at least 0.25 percentage point to the cost of a mortgage.

The couple both have pensions in place - Andy through Friends Provident, and Sharon is a member of BA's occupational scheme and also makes top- up payments into the company's Additional Voluntary Contribution (AVC) scheme.

The Adviser: Andrew Hunt, independent financial adviser at Maddison Monetary Management, with branches nationwide. Call freephone: 0800 074 2233.

The Advice: Now the mortgage is up and running, Sharon and Andy need to ensure that they set up an appropriate cash flow management system, in order to understand how their income and expenditure match up. In order to manage their cash flow effectively they will need to calculate their average monthly net income. As this is variable, they should monitor their expenditure in detail, by keeping a record of how much they spend in specific areas and ensuring that at the beginning of each month they transfer the required amount into a "household budget account". Whatever is left over is their disposable income.

Another fundamental of any financial plan is that of a cash reserve, an account that can be accessed at short notice to cater for any emergencies or opportunities that may arise. An amount equal to three months' expenditure is recommended, although some people may feel this is insufficient, depending on circumstances.

Sharon has already opened a Postal Account to house her cash reserve. These are ideal for cash reserves and for holding money for short-term objectives. Some of the best rates available on instant access accounts include Safeway Bank (yes, the supermarket), which is offering 7.4 per cent gross interest on balances in excess of pounds 2,500, and Northern Rock, offering 7.85 per cent on deposits of over pounds 10,000.

Once Sharon knows her current financial position is in order, she should consider medium- to long-term issues, including protection, retirement and investment objectives.

Protection is important particularly because Sharon and Andy have just taken on a mortgage. Whilst their mortgage has been protected against death, they need to consider protection in the event of long-term illness or disability.

The main form of "disability insurance", Permanent Health Insurance (PHI), pays out a tax-free monthly income in the event of the insured being unable to work through almost any accident or illness.

Increasing demand, as insurers see a rise in claims over the coming years, means premiums are likely to rise. So it is important to choose a provider that guarantees to keep premiums level throughout the life of the plan, such as Canada Life, Zurich Life or Swiss Life.

Although Sharon is only 24, she should also consider retirement planning. She is a member of BA's pension scheme. By the scheme retirement age of 55 (for cabin crew) she will have accrued a gross annual pension of approximately 56 per cent of her basic salary.

Sharon should therefore be looking to boost her pension income through Additional Voluntary Contributions (AVCs), either through her employer or through a private arrangement. In-house AVCs can be beneficial in that the employer may match contributions and/or pay some of the attached charges. But a Free-Standing arrangement provides choice and flexibility.

Sharon is currently paying AVCs with British Airways but should consider her options fully when deciding to increase these. If she were to effect a Free-Standing arrangement she should consider a provider who will allow the flexibility to vary contributions without heavy penalties, for example if she were to take time out to start a family. Leading providers of such flexible plans include Scottish Widows and Commercial Union. Andy, being self-employed, has a Personal Pension Plan with Friends Provident.

Sharon's main interest is rebuilding her savings. She is considering investing in another PEP for the current tax year, which is also the last that PEPs will be sold, and is prepared to take a higher than average risk with her long-term savings.

Sharon may therefore wish to consider funds that invest in Europe or even maximising the 25 per cent of her PEP allowance which can be invested outside the EC.

An ideal PEP for this purpose is the Skandia MultiPep, which offers access to 75 funds through 17 different fund managers across all sectors of the market.

With the MultiPep, one can switch between funds at very little cost, thereby giving greater investment flexibility and control over the longer term. However, the annual management fee incurred on the MultiPep is high, involving both a fee to Skandia and a separate one to the fund manager, totalling an average of 2.5 per cent a year. If a MultiPep were to be used, it should be accompanied by regular reviews to determine the need for switching from one fund to another. Otherwise the extra costs might outweigh the benefits of flexibility.

If you are interested in having a free financial makeover, please write to Andy Verity, Free Financial Makeover, The Independent, One Canada Square, Canary Wharf, London, E14 5DL. You must be willing for your picture and financial details to appear in the paper.