Wealth Check: 'Can I afford to go travelling after I finish university?'

John Rafferty, 22, is a student, studying Electrical and Electronic Engineering at Queen's University Belfast. He is currently undertaking a year's industrial placement with Powerteam Electrical Services and he lives with his parents in Warrenpoint, Co Down.

As he will soon be entering full-time employment, John is eager to receive some advice about buying his first car and owning his own property.

"By the time I'm 30 I would like to have done some travelling and own my first house. How realistic is this going to be on an engineer's salary?" he asks.

Besides finishing his degree and getting a full-time job, John is also keen to start putting some money away for the future and building up his pension with an aim to retiring when he is 65. "Ideally I would like to retire by the age of 65 with my family home fully paid off. What advice can you give me regarding pensions?" he asks.

Case notes

Income: £12,500 per year
Debt: Average student debt
Monthly outgoings: £175 tax and National Insurance contributions, £400 living expenses
Other: Fuel – £150 per month

Advice this week is given by Mel Kenny of Radcliffe & Newlands, London, John Kelly of Chelsea Financial Services and Danny Cox of Hargreaves Landsdown...


The experts agree that John should begin to repay his debts immediately in order to give himself a savings buffer and substantial deposit for his first property.

"Longer term, when John looks to borrow to buy a property, the bigger the deposit, the better and cheaper the range of mortgage deals that will be available to him," says Cox. "In a normal mortgage market, first-time buyers were able to borrow 100 per cent of the value of a property (and sometimes more). However, since the credit crunch, deposits of at least 20 per cent are required plus a spotless credit history. Lenders also take into consideration other debts including student loans. Perhaps the best way to tackle the repayment of debt – and to save – is to have a budget and set a target. This target should be high enough to be meaningful but not so high that John looses motivation. If money is tight, saving something, even a modest £50 per month will soon build up and provide a good habit to get into."

"Houses in Northern Ireland have already lost a quarter of their value in the last year," adds Kenny. "If the house bears are right, the housing market will be dour for many years to come due to the likely continuation of restrictive lending practices and, following the recent stimulus, the likelihood of higher interest rates further down the road. John may therefore be pleasantly surprised, or otherwise, by the housing market in eight years' time. Threats to his plans may no longer then be property prices, but the price of borrowing."


"Travelling the world is no longer a rite of passage for our university leavers," explains Kelly. "The credit crunch has put paid to that notion. With current unemployment rates on the rise, our young need to get serious about foregoing potential employment for the thrill of broadening their horizons."

At the moment there is no indication that there will be employers rushing to offer positions to John when he returns from his travels. Indeed it might be a case of signing on rather than up after a stint globetrotting, should he go.

"Travelling is a luxury: John should consider intently any job opportunity he might receive after leaving university. Should he decide to go travelling, he may find it difficult to find a bank that will service his loan needs as all banks have tightened their lending since the onset of the credit crunch. He should firstly check with his current bank to discover if they are offering any graduate loans."


"John should attempt to put away at least three times his monthly salary," explains Kelly. "This will help to provide for any unforeseen expenses or emergencies. Currently the best savings rate through a cash ISA is 3.55 per cent offered by Barclays Bank. Only after these goals are achieved should he consider saving for a house deposit or starting an investment portfolio.

"The earlier he can start his investment and pension portfolio the better, as he will benefit from the effect of compounding. The more he puts into his pension, the more comfortable he will be in retirement. To achieve a retirement income of £20,000 aged 65 (assuming a growth rate of 7 per cent and adjusted for inflation) he would need to save around £300 per month."

"When John gets a job he should check whether his employer offers a pension scheme, if they do, he should join," adds Cox. "John's aim is to retire at 65 and he needs to bear in mind that the Basic State Pension will not be payable until age 68 by the time he retires. In the absence of a company pension scheme he should consider starting a private pension."

For a free financial check-up, write to Wealth Check, The Independent, 2 Derry Street, London W8 5HF; or email wealthcheck@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

The data shows that the number of “unlawfully” large infant classes has doubled in the last 12 months alone
i100Mike Stuchbery, a teacher in Great Yarmouth, said he received abuse
Arts and Entertainment
The starship in Star Wars: The Force Awakens
filmsThe first glimpse of JJ Abrams' new film has been released online
Rio Ferdinand returns for QPR
sportRio Ferdinand returns from his three-game suspension today
The Speaker of the House will takes his turn as guest editor of the Today programme
arts + ents

Watch the spoof Thanksgiving segment filmed for Live!
Billy Twelvetrees will start for England against Australia tomorrow with Owen Farrell dropping to the bench
rugbyEngland need a victory against Australia today
Arts and Entertainment
The cover of The Guest Cat – expect to see it everywhere
Tyson Fury poses outside the Imperial War Museum in south London ahead of his fight against Dereck Chisora
boxingAll British heavyweight clash gets underway on Saturday night
i100 Charity collates series of videos that show acts of kindness to animals
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Austen Lloyd: Company Secretary

    Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...

    Citifocus Ltd: German Speaking Client Specialist

    £Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...

    Citifocus Ltd: Performance & Risk Oversight

    £Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...

    h2 Recruit Ltd: Sales Director - SaaS (SME/Channel) - £140,000 OTE

    £90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...

    Day In a Page

    Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

    Christmas Appeal

    Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
    Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

    Is it always right to try to prolong life?

    Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
    Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

    What does it take for women to get to the top?

    Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
    Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

    Knitting pretty: British Christmas Jumpers

    Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
    French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

    French chefs campaign against bullying

    A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
    Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

    Just what you need on a New Year hangover...

    Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
    Cuba set to stage its first US musical in 50 years

    Cuba to stage first US musical in 50 years

    Claire Allfree finds out if the new production of Rent will hit the right note in Havana
    Christmas 2014: 10 best educational toys

    Learn and play: 10 best educational toys

    Of course you want them to have fun, but even better if they can learn at the same time
    Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

    Paul Scholes column

    I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
    Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

    Lewis Moody: Lancaster has made all the right calls – now England must deliver

    So what must the red-rose do differently? They have to take the points on offer 
    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
    Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

    Sol Campbell cries foul at Labour's mansion tax

    The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
    Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

    Sarkozy returns

    The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
    Is the criticism of Ed Miliband a coded form of anti-Semitism?

    Is the criticism of Miliband anti-Semitic?

    Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
    Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

    Ouija boards are the must-have festive gift

    Simon Usborne explores the appeal - and mysteries - of a century-old parlour game