Wealth Check: A £19,000 salary and a dream of owning a home in the capital
Sunday 16 December 2007
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.
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.
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.
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.
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 firstname.lastname@example.org
Diving in at the deep end is no excuse for shirking the style stakes
Consumers given power to choose a green deal
'Scrap the trap': calls for change grow as banks are told to play fair with loyal savers
Bargain Hunter: Eurostar offers child fares for £1 each way to Paris, Brussels and Lille
Relaxed pensions rules: Guide to what they mean to you
Moment of truth for payday lenders: Watchdog plans to curb cost of short-term loans
- 1 Why I'm on the brink of burning my Israeli passport
- 2 Comfortable in their own skin
- 3 Japanese plant experts produce 10,000 lettuce heads a day in LED-lit indoor farm
- 4 War is war: Why I stand with Israel
- 5 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...
Day In a Page
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square