Welcome to the new Independent website. We hope you enjoy it and we value your feedback. Please contact us here.

Spend & Save

Wealth Check: 'I want to save money but still have a social life'

Rachel Walters, 22, a PR and marketing manager, originally from Toronto and now living in Camden, north London, finds herself struggling to make ends meet each month. "I've had a really unique experience here, but I realise I need to make some changes," she says.

Case notes

Rachel Walters, 22, London
Income: Rachel earns £17,500 a year.
Monthly spending: her rent is £800 including utility bills and taxes; she also spends around £350 on food, socialising, and trains to Sheffield to visit her boyfriend.
Pension: Rachel's parents have been making payments into an RRSP for her in Canada.
Debts: Rachel owes around £7,000 in student and credit loans.
Savings: she has no savings.

"I want to maintain my active social life and be able to save at the same time, but I am always concerned that I won't be able to make it through an entire month."

Rachel does not plan on ever retiring, and does not have any long-term financial goals or investments apart from an RRSP scheme (a form of personal pension arrangement with similar tax advantages to the UK) that her parents set up for her in Canada.

Three independent financial advisers help Rachel this week: Dennis Hall of Yellowtail Financial Planning, Tom McPhail of Hargreaves Lansdown, and Anna Sofat of Addidi Wealth Ltd.


The advisers agree that Rachel can do a better job of budgeting with her money and could cut some overhead costs, especially in terms of travel.

"Rachel uses the Tube to travel to work, probably using an Oyster card – this is costing her £6.30 a day. If she bought a monthly bus pass, she would reduce her monthly travel bill by some £40 per month," says Sofat. "Rachel needs to monitor her spending more closely and control elements where she is tending to overspend."

"The only other option is to increase her income," says McPhail, "either from her current employment or by taking on a second job. Does she feel she is being paid a fair rate for what she does, and if not, is there any scope to renegotiate her salary?" he asks.


"Rachel's priority should be to build up a cash reserve of at least £2,000. I appreciate that this may be ambitious, and may take some time to achieve, but it is the kind of target she should aim for," says McPhail.

Hall recommends that anyone not currently making regular savings for their future should give themselves a pay cut of at least 5 per cent and pay that money into a savings plan.

"She should start a monthly savings plan with a small direct debit amount from her bank account into a cash ISA. Egg's cash ISA will accept as little as £1 to open and pays 6.05 per cent," says Hall.

"Rachel should start to tackle the repayment of her student debt as soon as she has built up some emergency funds," he adds. "Even though the interest rate is quite low, she still needs to repay this out of her taxed income."

Investments & Pension

Though Rachel is young, the advisers are concerned about her lack of long-term provisions. "Rachel should find out more about her RRSP in Canada, and try to get more involved with how it is invested. Ideally it should be held principally in company shares, perhaps through a mutual fund, but this is something worth asking her parents about," suggests McPhail. "I take Rachel's point that she does not want to retire," notes Hall, "but this shouldn't be a reason to not start saving for the future, as this will provide her with choices."

To find an independent financial adviser in your area, visit www.unbiased.co.uk

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