A brighter future - on equal terms

Julie Weir
Age 38
Lives in Harlington, Bedfordshire
Occupation Adoption social worker
Earns ?25,500
Mortgage ?75,000
Debts Car loan and loan from sister
Investments Endowment
Pensions Local authority scheme
Aims To save for children and retirement

Julie Weir's daughter has just started school. This saves her £250 a month in childcare costs and has made a big difference to her monthly cashflow: 'Now I have a little extra each month for the first time in my adult life.'

As her budget has become easier, Julie wants to sort out the rest of her finances as well: 'I am not financially minded but I want to make the most of the little money I do have. I'd like to invest wisely for my future and for that of my children.'

Julie is single and has two children; Hope, five, and Ben, 19, who is still living at home although he is financially independent.

She says: 'I have not been able to save for my son in the past but I would like to treat Ben and Hope equally. I would also like to save for my daughter's further education. Her dad is keen to consider this also.'

She receives maintenance payments from Hope's father and wonders whether they should save jointly for her university costs.

Julie realises that she should have more saved up for emergency use and is confused about whether she should try to reduce her mortgage to save interest payments or buy an Isa. Perhaps optimistically, she says: 'The thought of making some money quickly appeals and I feel happy to take a higher-risk investment with some money each month.'

Her only savings are £500 in her current account. She has paid off her overdraft and credit card debt but owes her sister money, for which she puts aside £350 a month. She has a car loan through work, with repayments deducted from her salary, which will be paid off in July.

She bought her house nearly eight years ago for £55,000 and extended it three years ago. Last year she remortgaged for £75,000 and discovered that it was worth £150,000.

Originally, Julie had an endowment mortgage for £52,000 with Standard Life. This matures in 17 years' time but Julie does not know if it will reach its target, which is why she switched to a repayment loan.

She says: 'I thought I would keep any extra I had left over when the endowment matures but I don't know if I would be taxed on this if it wasn't used for the house.'

Although she is in a good local authority pension scheme, she started contributing only eight years ago. She would like to retire comfortably at 55 but is not sure how to achieve this: 'I have heard of Additional Voluntary Contributions but also heard that, if I died, the money would not be useful to those I have left behind.'

She would also like to make a will: 'But I am not sure what I would leave to whom, and feel I ought to sort out my finances first.'

Adviser 1: Anna Bowes

Julie's pension is secure but, to retire at 55, she
needs to save as much as possible, preferably
through the in-house AVC. The Standard Life
endowment will provide a lump sum when she
retires, which can be used to boost her income.

She needs a higher emergency reserve. In the
short term, she can save in an easy access
savings account. Currently the best rate is 6.9 per
cent from Bristol & West's internet account. She
could consider a mini cash Isa, such as 7.05 per
cent with Northern Rock.

She can reduce her mortgage rate by switching to
a lender such as the Halifax, which is offering
5.35 per cent

If she is prepared to take some risk, she should
buy a stocks and shares Isa, but hold it for at least
five years. These range from the lower risk
corporate bond Isas, such as M&G High Yield
Corporate Bond fund, to higher-risk funds such as
Framlington Health. She could consider a UK
fund, possibly ABN Amro UK Growth fund, or a
global investment such as the Fidelity
International fund.

These investments should provide healthy returns
in the medium to long term. She should keep her
investments for her daughter separate from those
of Hope's father.

She should have life insurance to provide for
Hope. She may find that her employer provides
an early retirement package through ill health
and a death benefit.

Anna Bowes works for Bath-based Chase de Vere.

Adviser 2: Joanne Cox

First, Julie should ask Hope's father if he has
arranged for money to be available if he dies. If
not, she can insure his life to replace the
maintenance payments. She should also ensure
that Hope's father could manage if she died.

She should ask her employer for a pension
forecast at 60 and 55. If it is not enough, she can
buy added years or make Additional Voluntary
Contributions. Most pensions return the fund or
contributions to your estate if you die before
retiring.

Julie should also check that her mortgage is still
competitive. The returns on her endowment are
still free of tax provided she pays premiums for at
least three-quarters of the term.

She needs an instant access deposit for
emergencies, the equivalent of three months'
income or ?5,000.

If Julie wants to give Ben some money within five
years, she should use a cash Isa. She could add
the money saved once the loan to her sister is
repaid. For Hope she needs long-term saving such
as a mini equities Isa, provided she is happy for
the fund to fluctuate in value.

She should save as much as she can afford for the
children. Julie is wrong to think you can make
money quickly by taking risk. High risk means
there is a high risk of losing your money.

Joanne Cox works for Co-operative Bank Financial
Advisers.

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