Wealth Check: Nineteen and living for tomorrow


The problem: A home, a car, a pension. Can she live the dream?

Emma Stanley from Flint, North Wales, is training to be an accountant. But with ambitions to buy a car, own a home and one day run her own accounting business, she will have to sort out her own financial figures.

For the moment, those dreams are some way off. Emma, who is 19, first needs to pass her examinations - she is studying for the Association of Accounting Technicians (AAT) qualification - and gain the relevant experience.

Since finishing her A-levels just over a year ago, Emma has worked as an accounts clerk at a small firm, on a salary of £9,300. She has no credit cards or loans, and while she does have a Dorothy Perkins store card, she pays it off each month.

"And I don't have any student debts, as I went straight into work when I left school."

Emma has also been disciplined about building up her savings and already has just over £3,000 in a tax-free mini cash individual savings account (ISA) with Smile, paying 4.5 per cent, and £100 in another Smile account at 4 per cent.

While she lives at home with her parents, paying £120 a month in rent, she is keen to get on to the property ladder in the near future. More immediately, she wants to save up to buy a car.

Emma is also saving for the longer term, and has just begun paying £23 a month into a stakeholder pension. "This was recommended by my employer, but I'm not sure if it is the right product for me."

At present, she has no protection policies in place.

The cure: Don't rush to get on the property ladder

Emma is in the "enviable position" of not being saddled with huge amounts of debt from university, and should try to keep it this way, says Ben Yearsley at independent financial adviser (IFA) Hargreaves Lansdown.

"Emma has lots of goals she wants to achieve over the next few years, but needs to organise her priorities."

He recommends she draw up a budget detailing her income and outgoings, so she can work out where savings can be made.

"Her chosen career will pay well eventually," he adds, "and it may be worth waiting until she is either partially or fully qualified before looking at buying her own home. If she waits a few years, this gives her a chance to build up a sizeable deposit."

As Emma's immediate goal is to buy a car, she should do this by paying more into her ISA, says Amanda Davidson at IFA Baigrie Davies.

In the longer term, she urges Emma to carry out thorough research before going ahead with her plans to run her own business. "She's got some good grounding in terms of learning accountancy, but she will need to take broader soundings from other professionals."

Savings

The mini cash ISA is the right home for her money, says Ms Davidson, but Emma should keep an eye on the interest rates as these may change.

Mr Yearsley adds that with plans to buy a car, and then a home, she should think about setting up a monthly standing order between her wages and her ISA to build this pot up as quickly as possible. "She can contribute up to £3,000 a year tax-free."

Debts

Mr Yearsley says Emma should continue resisting the temptation to take out plastic. "Many people obtain credit cards and then spend, spend, spend - and get themselves into horrendous amounts of debt."

Property

While Emma benefits from paying a very low rent to her parents, she will need to pay a lot more when she moves away, cautions Drew Wotherspoon at IFA John Charcol. But he adds that as she has no debts, she is "a mortgage firm's dream".

"Several lenders now base their borrowing criteria on affordability, instead of the traditional strict income multiples. Emma will benefit from this."

But he suggests she wait until her salary has gone up, adding that to get the best mortgage deals, she should work towards saving for a 10 per cent deposit.

Ms Davidson says Emma will also need to budget for legal and arrangement fees, and stamp duty.

Retirement

Ms Davidson applauds Emma's decision to make a start on a pension at such a young age. "It may not be a huge amount of money, but given the timescale involved, these sums will have a real impact on her retirement income."

She adds that a stakeholder pension makes sense for Emma as it is flexible - allowing her to stop and start contributions whenever she wants - and the charges are capped. However, Mr Yearsley says that while these pensions are a low-cost option, there is limited investment choice.

"Emma doesn't necessarily have to stay in the stakeholder - unless her employer pays into it for her," he says. "She should seek advice as there are other types of pension she could look at."

Protection

Emma should consider this once she buys a home, says Ms Davidson. "It would be sensible to have a life assurance and critical illness plan to cover the mortgage amount, and she should also consider income protection when her salary increases."

If you would like a makeover, write to Sam Dunn at The Independent on Sunday, Independent House, 191 Marsh Wall, London E14 9RS, or email s.dunn@independent.co.uk

Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Sport
The Pipes and Drums of The Scottish Regiments perform during the Opening Ceremony for the Glasgow 2014 Commonwealth Games at Celtic Park on July 23, 2014 in Glasgow, Scotland.
Commonwealth GamesThe actor encouraged the one billion viewers of the event to donate to the children's charity
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
Life and Style
fashion Designs are part of feminist art project by a British student
PROMOTED VIDEO
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
newsJohn Walsh salutes those brave souls who have, throughout history, put their knives on the line
News
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
books
News
Joining forces: young British men feature in an Isis video in which they urge Islamists in the West to join them in Iraq and Syria
newsWill the young Britons fighting in Syria be allowed to return home and resume their lives?
News
i100
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
News
Bey can do it: Beyoncé re-enacts Rosie the Riveter's pose
newsRosie the Riveter started out as an American wartime poster girl and has become a feminist pin-up. With Beyoncé channeling her look, Gillian Orr tells her story
Life and Style
Donna and Paul Wheatley at their wedding
healthShould emergency hospital weddings be made easier for the terminally ill?
Arts and Entertainment
Residents of Derby Road in Southampton oppose filming of Channel 4 documentary Immigration Street in their community
tv
Voices
voicesSiobhan Norton on why she eventually changed her mind
News
i100
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

    PMO Analyst - London - Banking - £350 - £400

    £350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

    Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

    £300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

    Insight Analyst – Permanent – Up to £40k – North London

    £35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

    Test Lead - London - Investment Banking

    £475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

    Day In a Page

    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
    Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

    Beyoncé poses as Rosie the Riveter

    The wartime poster girl became the ultimate American symbol of female empowerment
    Climate change threatens to make the antarctic fur seal extinct

    Take a good look while you can

    How climate change could wipe out this seal
    Should emergency hospital weddings be made easier for the terminally ill?

    Should emergency hospital weddings be made easier?

    Some couples are allowed emergency hospital weddings, others are denied the right. Kate Hilpern reports on the growing case for a compassionate cutting of the red tape
    Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

    Crowdfunded novel nominated for Booker Prize

    Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
    Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

    Vladimir Putin employs a full-time food taster

    John Walsh salutes those brave souls who have, throughout history, put their knives on the line
    Tour de France effect brings Hollywood blockbusters to Yorkshire

    Tour de France effect brings Hollywood blockbusters to Yorkshire

    A $25m thriller starring Sam Worthington to be made in God's Own Country
    The 10 best pedicure products

    Feet treat: 10 best pedicure products

    Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
    Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

    Noel Fielding's 'Luxury Comedy'

    A land of the outright bizarre
    What are the worst 'Word Crimes'?

    What are the worst 'Word Crimes'?

    ‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
    Can Secret Cinema sell 80,000 'Back to the Future' tickets?

    The worst kept secret in cinema

    A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
    Facebook: The new hatched, matched and dispatched

    The new hatched, matched and dispatched

    Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
    Why do we have blood types?

    Are you my type?

    All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
    Honesty box hotels: You decide how much you pay

    Honesty box hotels

    Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit