Wealth Check: A £19,000 salary and a dream of owning a home in the capital

The patient

Rita Dores, 29, struggles to make ends meet in London, where the cost of living is far greater than in her home country of Portugal. "I moved here 10 years ago because I was young and wanted to try a different way of living, and ended up staying," she explains. "However, it is very expensive and I don't earn much."

Rita works as a public relations adviser, on a salary of 19,000 a year. On this, she has managed to squeeze out a little spare cash to build up a small sum in savings. She has 3,000 in an individual savings account (ISA) with National Savings & Investments, paying interest at 6.05 per cent.

When she arrived in England, she had no borrowings. But in the three years following the move, she accumulated 4,000 on a credit card. She has since managed to wipe out this debt.

At present, she is renting a room in a flat in Maida Vale, paying 390 a month. But she is keen to achieve more security by buying her own flat.

Long term, Rita says she wants to prepare for a comfortable retirement. She has no pension but hopes to start soon.

The cure

Rita has taken important steps in establishing her financial future in this country by wiping out her debt and starting to build a savings buffer. But given her small salary, our panel of independent financial advisers (IFAs) warn she has some way to go before she can buy her own home.

Savings/investments

If Rita is serious about saving, she should draw up a budget and stick to it, says Ian Hudson from IFA Hudson Green & Associates. In saving towards a deposit for a home, Rita has chosen sensibly with a tax-efficient, easy-access cash ISA.

However, she could benefit by shopping around for a different provider. Last week National Savings & Investments reduced the rate on its cash ISA by 0.25 per cent, in line with the Bank of England base rate. This means it is no longer among the most competitive on the market. For example, National Counties building society is paying 6.26 per cent on its cash ISA.

If Rita has any spare funds left, she could put some into a stocks and shares ISA. This entails more risk, but if she invests long term using regular payments to smooth out any market downturns, the rewards will be greater, says Kevin Anderson from IFA Budge & Co.

Property

With prices in London at an all-time high, Rita's goal of buying her own home could be hard to meet. Her current rent is equivalent to an interest-only mortgage of just 78,000, says Mr Anderson. She should concentrate on increasing her savings, and consider buying with a friend or partner when the time comes.

Retirement

An important part of a secure future is pension planning. Rita has put no money aside for this but has been accruing a state pension since she started working here, adds Mr Anderson. "This will be payable even if she goes back to Portugal."

She should ask her employer for details of its pension scheme. If it will match any contributions she makes, says Jason Witcombe at IFA Evolve Financial Planning, it is important she takes advantage of this.

If you would like a makeover write to Julian Knight at The Independent on Sunday, Independent House, 191 Marsh wall, London E14 9RS. Or email j.knight@independent.co.uk

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