Wealth Check: 'Can I afford to save for a house and a wedding?'

Nicola Riseam, 28, a digital marketing manager from London, has her day-to-day finances under control, but with a wedding and a new home on the horizon, her priorities are torn and she is uncertain about her financial obligations for the future.

"I don't know how we can achieve what we want to in the next few years," she says. "We will be saving a substantial amount a month for the wedding but I don't know whether I should put some of that on the mortgage for our flat to reduce it so we can buy a house. We need to have enough money to get married but also safe-guard our future by doing enough to buy a property."

Case notes

Salary: Nicola earns about £30,000 a year.
Monthly outgoings: She spends £1,000 a month on living expenses, and £1,050 goes into savings for the couple's wedding and a new home.
Savings: Nicola's savings are split – £800 goes into a savings account every month and about £250 is put away under her employer's company share save scheme.
Mortgage: Nicola and her partner share the repayment mortgage on her property, worth £112,000.
Pension: Nicola pays 5 per cent of her salary into a company pension scheme, which would pay out £4,000 a year in retirement income at its current level.
Debt: £0.

Three independent financial advisers help Nicola this week: Kevin Tooze of Equity Partners, Gordon Bowden of Quainton Hills Financial Planning, and Darius McDermott of Chelsea Financial Services.

Savings & property

The advisers agree that Nicola appears to be in a strong position to achieve her objectives. "But there is one glaring conflict," warns Tooze, "and that is that she wishes to spend £20,000 on a wedding yet save to purchase a property. Much like oil and water, the two do not mix."

If she is convinced of the value of her wedding plans, it's imperative that she maximises the savings rates on offer. "Nicola can invest up to £3,600 in a tax-free cash ISA before 5 April 2009," says Bowden.

"She can then save up to £300 per month to take advantage of future years' allowances. Halifax is currently offering 3.7 per cent fixed interest for one year provided she deposits at least £500."

Alternatively, regular savings by direct debit with Scottish Widows which is currently paying 3.6 per cent interest on their E-cash ISA including a 1.5 per cent 12-month bonus.

Both Nicola and her fiancé should use their annual ISA allowance and then shop around for the best savings deal for their other savings of £800 a month, he adds. Barclays, for example, are paying a fixed 6 per cent on regular savings of up to £250 per month for 12 months.

But in this housing climate, Tooze recommends that the couple should focus on their property hopes as now could be the perfect time to pick up a reasonably priced home.

"With incredibly low interest rates and properties decreasing in value, now is an excellent time for Nicola to move up the property ladder," he says. "Part of this plan should be to reduce the cost of her wedding, which will pay considerable dividends in later life, and place far less burden upon their income when looking to meet mortgage payments."

"Nicola will need a significant deposit for her property," agrees McDermott. "Banks are simply not lending to anyone who walks through the door with only a 10 per cent deposit. The good news is that once Nicola can raise a substantial deposit of 20 or 30 per cent, she can take advantage of very attractive mortgages rates. Interest rates are extremely low and expected to fall further."

Pension & investment

"Nicola has sensibly started her pension plan early," McDermott adds. "She should continue to do this, gradually increasing her contributions. After she has purchased her house and married, she should also consider supplementing her pension plan with an investment portfolio.

Given her low-risk approach to investing, Nicola should look at a mixture of low-risk equities and bonds."

Meanwhile, like many other people who have changed jobs, Nicola also has a pension fund from her previous employer. "This pension should be reviewed as it may be suffering from costly annual management charges," Tooze suggests.

"And considering the economic events of the last year, it's likely that the fund allocation needs to be reviewed. If it is possible, these investments may need to be altered to reduce the risk they may now carry to fit in with Nicola's 'not very risky' approach to investing."

Protection

The advisers applaud Nicola for having a will in place – unlike the 50 per cent of UK adults who don't. But other elements of her financial protection need reviewing.

Nicola only has mortgage payment protection insurance in place to protect her money if she becomes unable to work, but Tooze warns that this is probably inadequate.

"These policies typically cover mortgage payments in the event of being unable to work due to accident, sickness or unemployment," he notes. "But they only pay out for one or two years and the premiums are relatively expensive for such short-term cover."

He suggests that she should check the cover her employer would offer in this situation, as it may provide the equivalent cover that she is paying for separately. Nicola should then investigate income protection insurance which would cover her long term if she was unable to work.

For a free financial check-up, write to Wealth Check, The Independent, 191 Marsh Wall, London E14 9RS; or email wealthcheck@ independent.co.uk

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

News
people And here is why...
Voices
voicesBy the man who has
Sport
Arsene Wenger tried to sign Eden Hazard
footballAfter 18 years with Arsenal, here are 18 things he has still never done as the Gunners' manager
Life and Style
The new Windows 10 Start Menu
tech
PROMOTED VIDEO
Arts and Entertainment
Kristen Stewart and Robert Pattinson star in The Twilight Saga but will not be starring in the new Facebook mini-movies
tvKristen Stewart and Stephenie Meyer will choose female directrs
News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
Arts and Entertainment
Hilary North's 'How My Life Has Changed', 2001
books(and not a Buzzfeed article in sight)
Arts and Entertainment
There has been a boom in ticket sales for female comics, according to an industry survey
comedyFirst national survey reveals Britain’s comedic tastes
Arts and Entertainment
Twerking girls: Miley Cyrus's video for 'Wrecking Ball'
arts + ents
Arts and Entertainment
Ed Sheeran performs at his Amazon Front Row event on Tuesday 30 September
musicHe spotted PM at private gig
News
people'I’d rather have Fred and Rose West quote my characters on childcare'
News
Kim Jong Un gives field guidance during his inspection of the Korean People's Army (KPA) Naval Unit 167
newsSouth Korean reports suggest rumours of a coup were unfounded
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    Day In a Page

    Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

    The children orphaned by Ebola...

    ... then rejected by surviving relatives over fear of infection
    Pride: Are censors pandering to homophobia?

    Are censors pandering to homophobia?

    US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
    The magic of roundabouts

    Lords of the rings

    Just who are the Roundabout Appreciation Society?
    Why do we like making lists?

    Notes to self: Why do we like making lists?

    Well it was good enough for Ancient Egyptians and Picasso...
    Hong Kong protests: A good time to open a new restaurant?

    A good time to open a new restaurant in Hong Kong?

    As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
    Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

    Paris Fashion Week

    Lagerfeld leads a feminist riot on 'Boulevard Chanel'
    Bruce Chatwin's Wales: One of the finest one-day walks in Britain

    Simon Calder discovers Bruce Chatwin's Wales

    One of the finest one-day walks you could hope for - in Britain
    10 best children's nightwear

    10 best children's nightwear

    Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
    Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

    Manchester City vs Roma

    Five things we learnt from City’s Champions League draw at the Etihad
    Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

    Trouble on the Tyne

    Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
    Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

    Isis an hour away from Baghdad -

    and with no sign of Iraq army being able to make a successful counter-attack
    Turner Prize 2014 is frustratingly timid

    Turner Prize 2014 is frustratingly timid

    The exhibition nods to rich and potentially brilliant ideas, but steps back
    Last chance to see: Half the world’s animals have disappeared over the last 40 years

    Last chance to see...

    The Earth’s animal wildlife population has halved in 40 years
    So here's why teenagers are always grumpy - and it's not what you think

    Truth behind teens' grumpiness

    Early school hours mess with their biological clocks
    Why can no one stop hackers putting celebrities' private photos online?

    Hacked photos: the third wave

    Why can no one stop hackers putting celebrities' private photos online?