Wealth Check: 'I don't have enough spending money'
Saturday 27 September 2008
Stephanie Witt, 26, from Southend-on-Sea, Essex, is a furniture buyer for Harrod's. Despite having a respectable salary and recent pay rise, saving for her wedding means she has little money left at the end of each month.
She is already on the property ladder and has no debt other than her mortgage and student loan, so Stephanie recognises that she is in a good position compared to many other people of her age, but she struggles with her spending money.
"Inflation is a concern for myself and many other people at present – food and petrol are far more expensive than a year ago. My fiancé and I have adjusted our spending habits slightly but still find that we have little disposable income left after paying for the essentials," Stephanie says.
Stephanie Witt, 26, Southend-on-Sea
Monthly spending: £350 on her mortgage, £400 on living expenses, her tax and NICs bill is £450 and £100 goes on insurance.
Savings: Stephanie saves £250 every month into a fixed-rate ISA
Pension: No pension yet, but wants to retire at 55 on £24,000 a year.
Property: Owns a two-bed flat
Debts: Mortgage and student loan.
Three financial advisers talk Stephanie through her financial situation this week: Anna Sofat of Addidi Wealth Manage-ment; Chris Wicks of N-Trust Limited; and Mike Pendergast of Zen Financial Services.
Making ends meet
Stephanie is struggling to make her money stretch to suit her lifestyle. But Anna Sofat suggests that she can do a number of things to cut down.
First, she suggests Stephanie should take control of work-related costs because spending on little things can build up quickly. For example, she could take a packed lunch to work and have a fixed time each week for treats such as a Friday morning latte. She should also review her travelling costs and see if her employer provides an interest-free or low-interest season ticket loan. Alternatively, she could look into coach travel, because although it might mean early starts, it could be cost saving.
Sofat recommends that Stephanie creates a budget for social spending and has a planned calendar to make it easier not only to fund activities, but as a reminder of events to look forward to. While these cost-saving methods are important, Sofat insists that Stephanie should not feel guilty about treating herself. "Save a few pounds each week for personal treats – clothes are one item where prices have not really increased. It's important to feel good today as well as save for tomorrow."
Wicks suggests that Stephanie should shop around to see whether she could change utility, household and motor insurance providers and also look into switching to a cheaper mortgage rate.
Wicks adds: "It may be worth investigating an offset mortgage, which effectively combines a deposit and current account with your mortgage. You do not pay any interest on the element covered by the deposit and current account. This not only reduces how much interest you pay but it can also result in your mortgage being paid off earlier."
Ideally, Stephanie wishes to retire at the age of 55 with a gross income of £2,000 per month. Wicks says that she should start saving for retirement sooner rather than later if she wants to retire on this income, as considering she is reluctant to take a risk, that is looking unlikely to achieve. "Stephanie's options are to reduce the targeted level of income, adopt a higher level of risk or put her retirement back to a later age," he says.
Sofat suggests that Stephanie should plan for a retirement age of 60. "She should start saving into her pension after the wedding. Look into a company pension scheme, and if there is not one she could look at a stakeholder pension. She should look to save about 10 per cent of her earnings into a pension and increase this by 0.5 per cent per annum."
Mortgage & protection
Stephanie has critical illness cover with her mortgage provider, but Pendergast says she should also check that she has life cover with them. Most critical illness policies include this. "Also ensure that if either you or your partner died or suffered a critical illness, the other could survive financially," he adds. "Check that the provider you have your cover with offers the best deal, as the difference between the cheapest and most expensive providers can be 50 per cent of the premium."
Savings & investment
Stephanie is "risk averse", preferring stable investments such as gilts or bonds to volatile investments such as equities investing in emerging markets. Pendergast says it is advisable to take a more medium-risk approach to investment, as gilts and cash deposits will grow at a lower rate over the long term compared to equities. He adds: "We'd always recommend that you carry out a risk-profiling exercise with an independent financial adviser, as this will mean that funds and investments can be chosen that match your risk profile and also ensure you have the best possible chance of achieving your financial goals."
For a free financial check-up, write to Wealth Check, The Independent, 191 Marsh Wall, London E14 9RS; or email email@example.com
- 1 A politically correct lefty goes to see Top Gear live – you'll probably believe what happened next
- 2 Woman accidentally shoots herself in the head while posing for a selfie
- 3 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
- 5 David Starkey 'tells Amal Clooney to shut up and stop over-promoting human rights'
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof