Wealth Check: 'I want to get a job and clear my student debts'

Declan McKay, 22, is a student who supplements his income by working as a barman. He lives in a rented property in Woodlands, Glasgow.

As he is entering the final year of his English literature degree, he is eager to begin planning for his financial future and learn the best way to clear his overdraft and student debt. "I want to know the most effective way to clear my student debts and begin saving money for the future," says Declan.

As well as completing his degree and clearing his debts, Declan is also keen to get a foothold on the property ladder and enter full-time employment. "I would like to have a steady income within three few years of leaving university, with a view to buying my own house by the age of 30. I am unsure of the exact job I would like to have but my degree will definitely benefit me if I work in something creative," he says.

Case notes

Income: £500 per month
Monthly outgoings: £300 rent, £200 living expenses
Debt: Student loan and overdraft
Savings: None

Advice this week is given by Anna Sofat of Addidi and Danny Cox of Hargreaves Lansdown...

Savings and overdrafts

The experts agree that Declan needs to work out a list of realistic financial expectations and stick to a stringent monthly budget if he is to pay off his student debts. His top priority should be to clear his overdraft because as soon as he leaves university his bank is likely to roll this into another product. The new overdraft is likely to cost more and so he should make it a priority to repay this back as soon as it's feasible.

"In order to start saving, Declan should set himself a budget," says Cox. "Even on his current modest income, setting and sticking to a budget is a good habit to get into. Perhaps the easiest way to do this is first to list all of his expenditures item by item. Then he should categorise each item as either essential, important but not essential, or luxury."

Cox says Declan should clear his overdraft before he starts to save. "He should set himself a target of how much he is going to repay each month toward the overdraft and stick to it. Overdrafts, alongside credit cards, are often the most expensive forms of debt. Converting an overdraft to a loan is generally not a good idea because over time the cost of repayment will end up being much higher."

Once the overdraft has been paid off, Declan should divert the debt repayments to savings, says Cox. "Declan should set a target that is realistic but not so high that he has no chance of meeting it and loses motivation. However, it needs to be high enough for it to be meaningful."

For new savings, Declan needs to build a cash cushion. "A cash ISA is perfect for this portion and, once working, Declan can save up to £300 a month or £3,600 a year in this way (£5,100 a year from 2010/11). Cash ISAs are tax-free, meaning a much better rate of return than a savings account. And by shopping around, Declan can maximise his interest returns," says Cox.


"Declan will need a decent deposit if he is to have a chance of owning his own home. He will need a deposit of at least 10 per cent of the purchase price. As soon as he is in work it would make sense to set aside some savings for his future goals," says Sofat.


Cox advises Declan to start saving for retirement as soon as he gets a full-time job. If the company he works for offers a pension scheme, Declan should join, particularly if the employer also pays into the scheme.

Cox says: "Retirement may be a 'lifetime' away, but a £100,000 pension fund today will pay an income to a 65-year-old of around £6,000 a year.

"Add in increasing options and bring that forward to the age of 60 and a £100,000 pension fund will provide a starting income of nearer £4,000 a year.

"Those who have ambitions of retiring before 65 – and for Declan, the state pension will not be paid until age 68 – will have to start saving early to have any chance of doing so," adds Cox.


Declan is graduating into a highly competitive job market, so needs to think hard about the type of job he wants. Sofat says: "Declan's key priority on graduating will be to find a job – the economic climate is not very good and many prospective employers are cutting back so it's imperative that Declan spends some quality time assessing what career he might want to pursue.

"He could compile a long and then a short list of job ideas and use that as a basis to get work experience in several different areas before deciding on a final career. He might have to do unpaid work experience so will probably need to continue working as a barman to fund his living costs during this period," says Sofat.

For a free financial check-up, write to Wealth Check, The Independent, 2 Derry Street, London W8 5HF; or email wealthcheck@independent.co.uk.To find an independent financial adviser in your area, visit www.unbiased.co.uk

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

Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Scunthorpe goalkeeper Sam Slocombe (left) is congratulated by winning penalty taker Miguel Llera (right)
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

    Ashdown Group: Marketing Services Manager - (communications, testing, DM)

    £32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

    Guru Careers: Finance Account Manager

    £Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

    Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

    £40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

    Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

    £45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

    Day In a Page

    Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

    Jeb Bush vs Hillary Clinton

    Karen Tumulty explores the power dynamics of the two first families
    Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

    Stockholm is rivalling Silicon Valley

    The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
    Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

    Crucified Santa: Urban myth refuses to die

    The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
    Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

    The Boy in the Dress: On set with the stars

    Walliams' story about a boy who goes to school in a dress will be shown this Christmas
    La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

    Deaf community outraged by La Famille Bélier

    The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
    10 best high-end laptops

    10 best high-end laptops

    From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
    Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

    Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

    The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
    Susie Wolff: A driving force in battle for equality behind the wheel

    Susie Wolff: A driving force in battle for equality behind the wheel

    The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
    Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

    'No abs Adam' plans to muscle in on Usain Bolt's turf

    After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
    Calls for a military mental health 'quality mark'

    Homeless Veterans campaign

    Expert calls for military mental health 'quality mark'
    Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

    Meet Racton Man

    Analysis shows famous skeleton was a 6ft Bronze Age superman
    Garden Bridge: St Paul’s adds to £175m project’s troubled waters

    Garden Bridge

    St Paul’s adds to £175m project’s troubled waters
    Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

    Stuff your own Christmas mouse ornament

    An evening class in taxidermy with a festive feel
    Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

    Joint Enterprise

    The legal doctrine which critics say has caused hundreds of miscarriages of justice
    Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

    Freud and Eros

    Love, Lust and Longing at the Freud Museum