Wealth Check: Lucy can make her trip abroad a lot less rocky
A snowboarder with the travel bug hopes her savings will be enough to make her six-month stay in Canada go smoothly. Interview by Harriet Meyer
Sunday 01 March 2009
Lucy Hares, 27, is emigrating to the Canadian Rockies in two years' time to enjoy the "outdoor lifestyle". Yet while it's an exciting move for the keen snowboarder, from near Minehead in Somerset, it's also financially nerve-racking as she will have to search for work and a home and cope with an unfamiliar currency.
"To make the transition smoother, I'd like to sort out my various bank and savings accounts before I go," she says. "It's taking four years in total to complete the emigration process as there's a long waiting list. I'm halfway through, so I have a while to prepare."
For the past six months, Lucy hasn't been working, but she manages to make ends meet by dipping into her savings and staying with family and friends to avoid paying rent and household bills.
Previously she has worked in several jobs, including as a guide on bike tours and as an outdoor activities instructor for seven years in central Europe, leading tours from Prague to Vienna. "I have earned a mixture of euros and pounds in recent years, bringing in a salary of around £20,000 a year."
Before leaving for Canada, she hopes to study for a postgraduate certificate in education (PGCE) at Brighton University, starting the one-year course in September. "I am looking into the cost of this but I think a government bursary will cover it so I will just need living costs," she says. "I hope to find work over the summer to save towards this, as well as part-time work while studying."
For short-term needs, she has several savings accounts in place, including around £15,000 in an Abbey cash ISA paying 0.56 per cent, and contributes to this whenever she can. "I hope to put this sum towards buying a house in Canada when I get there," she says. Additionally, she has £6,000 in a one-year fixed-rate savings account with Lloyds Banking paying 4 per cent, opened in July last year.
For everyday use, she has a Lloyds current account, with around £1,000 in an easy access savings account linked to this, paying 1.6 per cent. "I use this to dip into for emergency funds when needed."
From her time working in Europe, she has €€3,800 (around £3,330) in a Lloyds offshore euro-denominated current account. "I'm waiting for currencies to shift in my favour so I can make the most of this money when I transfer it," she says.
She also has US$1,600 (around £1,100) in a FirstBank current account from a stint as a snowboard instructor in Colorado several years ago. "I plan to use this money for a trip around India next month."
The only debt she has is £10,500 in student loans. And while she uses a Lloyds credit card, Lucy makes sure to wipe out the balance each month. "And I rack up air miles by using this card," she adds.
With a reasonable level of savings and cheap debt to service, Lucy has a "sound base" for emigrating to Can-ada and funding a property purchase one day, agree our panel of independent financial advisers (IFAs).
Once settled, she will need to consider her long-term goals and start making provision for the future through pensions or other investments.
The £15,000 in the ISA could eventually be put towards a deposit for buying a home, says Ajmer Somal from IFA Positive Solutions. "However, as Lucy will become a UK non-resident, she must remember that she will be unable to hold this type of tax-efficient account once living in Canada."
In the meantime, as the Abbey ISA is paying a pitiful rate, Philip Pearson from IFA P&P Invest suggests she transfers to a fixed-rate cash ISA.
For example, Saffron building society is offering a two-year fixed ISA that allows transfers and pays 3.3 per cent. This will guard against further falls in the Bank of England base rate, currently standing at just 1 per cent.
Yet for use in an emergency, Lucy should keep around three months worth of expenditure on easy access. For this purpose, she could shift her savings from the Lloyds easy access account to one paying a better rate, although there are few attractive deals on offer at present.
As a precaution, Lucy should keep the Lloyds current account when she moves, and maintain a cash reserve in this. "This may be needed in case things don't work out in Canada and she needs to return to the UK," Mr Pearson points out.
Turning to the euro and dollar accounts, the advisers say now is a good time for Lucy to be buying sterling as it is currently weak against other currencies. "She could use the profits to fund next year's ISA allowance," says Mike Wellby from IFA Honeybee Financial Planners.
However, unless she needs this money to hand, an alternative would be to use it to buy Canadian dollars in preparation for her move, as this currency is weak against the euro at the moment.
As a priority, Lucy should calculate her income for the current tax year, ending on 5 April, and estimate what it may be for the next two years.
"If her taxable earnings are below the personal allowance threshold, currently set at £6,035, she can claim back any tax paid on interest earned on her savings," says Mr Wellby. "And the training bursary for a PGCE in primary education, at £4,000 for 2008-09, will not count as taxable income."
She can complete the HM Revenue and Customs form R85 to register as a non-taxpayer. "Also, if Lucy is a non-taxpayer, it may be advantageous to switch some savings from her ISA to an ordinary notice account if the rates are slightly better," adds Mr Wellby.
Until Lucy is earning a regular income, she should avoid repaying her student loans. The rate charged on this debt is currently just 3 per cent, rising to 9 per cent on any earnings over £15,000. "This will apply to any equivalent earnings in Canada, and Lucy is required to notify the Student Loans Company when she goes to live abroad," says Mr Wellby.
As she has a disciplined approach to credit card debt, she could take out a Nationwide credit card for use on her travels. The building society doesn't levy fees for withdrawals or card transactions, while high-street banks typically charge a "foreign loading fee" of around 2 per cent.
"As Lucy plans to purchase a house in Canada in a few years, she should look at the likely cost, including factors like local taxes and legal costs," says Mr Somal. Then she can budget ahead for this event if she decides to press on with it soon after her move.
- 1 This is what happens when you tattoo Charmander on yourself, drunk, and with no experience
- 2 BBC election debate: The one photo that summed up the whole 90-minute leaders debate
- 3 18th century sex toy found in 'toilet of sword fighting school' in Poland
- 4 The Batman v Superman: Dawn of Justice trailer has leaked – watch
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
If I’m being racially abused I don’t need a white stranger with a saviour complex to rescue me
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
Russian warships in English Channel 'to conduct anti-aircraft and anti-submarine military drills'
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...
Day In a Page
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
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000