Wealth Check: 'How can I balance working, travelling and saving money?'

Sarah Croker works as a production coordinator for a TV company. Living at home with her parents means she is in a position to save a large proportion of her wage.

Sarah Croker works as a production coordinator for a TV company. Living at home with her parents means she is in a position to save a large proportion of her wage. On average, she has been putting half her monthly earnings into a savings account with ING but wonders whether this is the most efficient way to save.

Ideally, Sarah would like to use the money she is putting aside to move out of home in a year. Before then she is keen to use a small amount of savings to go travelling again.

Another worry for Sarah is her lack of pension, and moving between companies up to three times a year for different jobs means she doesn't envisage being offered an occupational plan in the near future. She would like some advice on what is available to her and how much money she should be putting aside.

We put Sarah's case to Darryll Connor at Towry Law Financial Services, Lisanne Mealing at MDM Associates, and Paul Barnes at BestInvest.

SARAH CROKER, 23, TV PRODUCTION CO-ORDINATOR

Salary: £19,200.

Property: Lives with her parents, so pays no rent.

Savings: Half her monthly wages go into an ING savings account.

Pension: None.

Investments: None.

Monthly outgoings: Doesn't pay for household bills or food. £144 on travel. £40 phone. £35 gym membership. £200 clothes, socialising and general living expenses.

SAVINGS

Paul Barnes says the ING account is reasonably attractive and offers a competitive interest rate but it could be improved upon. He suggests monthly savings should be split between a regular savings scheme such as the account on offer at HSBC, which pays 8 per cent, and a mini cash ISA. Sarah should be able to match the 4.89 per cent before-tax rate paid by ING rate in a cash ISA, where no tax is payable.

Lisanne Mealing says Sarah will find her savings grow much more quickly using the tax advantages under a cash ISA. If she acts quickly, before next Tuesday, she could pay £3,000 into an account in the current tax year and £3,000 in the next. Both Mealing and Darryll Connor suggest Alliance & Leicester, which offers an online account paying 5.4 per cent and instant access.

If Sarah goes travelling for a few months and her total income next year is less than £4,895, Connor suggests she registers to receive all her savings interest free of tax by completing form R85. These forms are available from most banks and building societies, as well as the Inland Revenue.

PROPERTY

Connor says Sarah is in a strong position, as she has disciplined herself to save each month in order to move out of her parent's home in about a year. He suggests Sarah looks into the associated costs of buying a property - the deposit, solicitors' fees and possibly stamp duty which applies to property purchases above £120,000 in the 2005/6 tax year.

If Sarah is looking at five years before she is intending to purchase property, Mealing suggests investing a full £7,000 into a stocks and shares ISA.

There are several new products available that are billed as alternatives to building society accounts with guarantees that lock in after certain periods.

DWS Ratebuster locks in gains on a six-month rolling basis and has an initial target of 7.75 per cent a year. Although you can access funds at any time, to lock in gains, you can only access the capital within a three-day period at the six-month rollover dates.

PENSION

Given Sarah's age she may be tempted to put pensions on the back burner, says Barnes. But this is something that needs to be addressed sooner rather than later. Sarah can contribute up to £3,600 a year to a stakeholder pension even without any earnings. So even if her employment is sporadic, then she can still make savings.

From a net income of about £1,200, and taking into account monthly outgoings, Sarah should have a spare £200 to £300 a month for additional saving or investment, says Mealing. Starting a pension would be no bad thing. If she could do this quickly, she should be able to find a stakeholder plan with a 1 per cent annual management charge, though many providers may increase the charge in the new tax year to 1.5 per cent.

With no employer contributions at present, this would give Sarah a good start and the plans would be flexible to changes to her circumstances. Connor says stakeholder pensions suit people who change employers in that they can retain a central pension pot. Employers, if they are willing, can contribute to this.

* For a free financial check-up, write to Wealth Check, The Independent, 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk

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

Life and Style
life
News
Brad Pitt and Angelina Jolie reportedly married in secret on Saturday
peopleSpokesperson for couple confirms they tied the knot on Saturday after almost a decade together
Life and Style
Chen Mao recovers in BK Hospital, Seoul
health
News
Joan Rivers has reportedly been hospitalised after she stopped breathing during surgery
people81-year-old 'stopped breathing' during vocal chord surgery
PROMOTED VIDEO
Arts and Entertainment
tv
News
i100
Arts and Entertainment
Diana from the Great British Bake Off 2014
tvProducers confirm contestant left because of illness
Arts and Entertainment
Lisa Kudrow, Courtney Cox and Jennifer Anniston reunite for a mini Friends sketch on Jimmy Kimmel Live
tv
Life and Style
fashion

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

    Client-Side web developer (JQuery, Javascript, UI, JMX, FIX)

    Negotiable: Harrington Starr: Client-Side web developer (JQuery, Javascript, U...

    Structured Finance

    Highly Competitive Salary: Austen Lloyd: CITY - An excellent new instruction w...

    SQL Server Developer

    £500 per day: Harrington Starr: SQL Server Developer SQL, PHP, C#, Real Time,...

    C#.NET Developer

    £600 per day: Harrington Starr: C#.NET Developer C#, Win Forms, WPF, WCF, MVVM...

    Day In a Page

    Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

    The phoney war is over

    Russian troops and armour pour into Ukraine
    Potatoes could be off the menu as crop pests threaten UK

    Potatoes could be off the menu as crop pests threaten UK

    The world’s entire food system is under attack - and Britain is most at risk, according to a new study
    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
    From Mozart to Orson Welles: Creative geniuses who peaked too soon

    Creative geniuses who peaked too soon

    After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
    Caught in the crossfire of a cyber Cold War

    Caught in the crossfire of a cyber Cold War

    Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

    Salomé: A head for seduction

    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
    From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

    British Library celebrates all things Gothic

    Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
    The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

    Is the Hard Rock Café worth fighting for?

    The restaurant chain's owners are currently embroiled in a bitter legal dispute
    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

    In search of Caribbean soul food

    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
    11 best face powders

    11 best face powders

    Sweep away shiny skin with our pick of the best pressed and loose powder bases
    England vs Norway: Roy Hodgson's hands tied by exploding top flight

    Roy Hodgson's hands tied by exploding top flight

    Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
    Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

    Di Maria and Ronaldo: A tale of two Manchester United No 7s

    They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
    Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

    Robert Fisk: No victory for Israel despite weeks of devastation

    Palestinians have won: they are still in Gaza, and Hamas is still there
    Mary Beard writes character reference for Twitter troll who called her a 'slut'

    Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

    The Cambridge University classicist even wrote the student a character reference
    America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

    America’s new apartheid

    Prosperous white districts are choosing to break away from black cities and go it alone