Save me from spendthrift girlfriends

Andy Cameron
Age: 30
Lives in: Aberdeen
Occupation: Long-distance lorry driver
Earns: ?20,000
Mortgage: None
Debts: None
Investments: Saves ?100 a week
Pension: None
Aims: To save and to have a pension

Andy Cameron has an unpleasant job: he drives lorries for a firm that handles industrial waste. 'My particular job is going to a meat factory and picking up the animal slurry from the slaughtered animals - chicken blood from the chicken factory or raw sewage. I am the new boy so I get all the nice jobs!'

For holidays, he gets into the fresh air, camping in the Lake District or Ireland: 'I like to get away on my own.' He has just returned from a camping break in Germany.

His priority is saving. 'The first thing I do when I get my wages is put a regular amount into my savings,' he says. He concentrates on saving to the exclusion of girlfriends: 'I am keeping away from relationships. When you are in a relationship, you just can't save anything. You go out for meals, go out drinking and buy each other presents.'

Andy earns about £330 a week, depending on overtime, and saves £100 of it, split between two savings accounts. 'I have about £300 in one and £250 in the other.' He pays £65 a week in rent, which includes all bills. 'I have no bills whatsoever apart from food which, for a week's shopping, is £20 or £30,' he says.

He is saving partly to buy a house. 'I am weighing up the pros and cons of a mortgage and buying a place. But it is a lot of money to get into debt with and I do like moving around,' he says.

Once he has bought a house, he will settle down: 'I wouldn't fancy, like some people do, jumping in and out of the housing market.' Whether this will be in Aberdeen, he does not yet know. 'I don't think it will be in Aberdeen but I have a good long-term job here so it is a possibility.'

House prices are high in Aberdeen, especially around the centre. 'You always have your downtrodden areas but I wouldn't fancy living in one of them,' he says. So he is going to delay buying and meanwhile build up his savings for a deposit: 'I am in no rush to buy but I am biding my time to see what happens.'

He would also like to start saving towards a pension. His employer has a stakeholder pension but he is thinking about sorting out his own.

Andy is determined not to waste money: 'I have just got my very first Visa card in my entire life and I am too scared to use it. While I have money in the bank, I am not touching my credit card.'

Adviser 1: Bina Abel

Andy should think more about where he is putting his money and how long for. His aim to buy a house means he should be saving for a deposit, and as this is a longer-term project, he could use a savings medium with a potential for a better return than a straightforward traditional savings account. I suggest he puts the first ?3,000 a year into a mini cash Isa, earning over 4 per cent tax free.

Depending on his attitude to risk, he could explore a mini-equities Isa, perhaps a corporate bond fund for a more cautious approach. This should be looked on as medium- to long-term savings. Or he could pick an account that rewards regular savers with a special rate of interest.

Lenders will lend three or four times salary but, while he might be able to afford the payments on a loan of ?80,000 at today's interest rates, he might be overstretched if rates went up.

Buyers with the biggest deposits usually get the better mortgage deals, so Andy's aim to buy later may stand him in good stead.

It is important he looks at joining his company stakeholder pension as soon as possible, particularly if his employer contributes. If he leaves his current employment he can take his stakeholder pension with him.

Andy has more than ?400 a month left after outgoings and savings and could easily afford to contribute to a pension and protect his income.

Bina Able is an adviser for the MarketPlace at Bradford & Bingley.

Adviser 2: Joanne Cox

Isas provide ideal savings as the funds remain accessible without penalty. If Andy does buy a house, he will probably get more favourable interest rates if he has a deposit. Ideally, he should save at least 5 per cent of the purchase price. He also needs to save for the associated moving costs, such as solicitor's fees.

Andy may also like to start saving for the longer term, perhaps in a stocks and shares Isa if he is attracted by potentially higher returns than deposit accounts pay. In addition to a cash Isa, he can save a further ?3,000 a year into a fund that invests in shares or corporate bonds.

Saving regularly takes away the worry of trying to invest at the right time, as money goes in each month. Indeed, the current economic climate is ideal for long-term savings as, with prices currently low, his money buys more units.

A stakeholder plan provides a tax-efficient and low-cost pension without tying Andy to future commitment, as premiums can be suspended without penalty. Andy can take out his own plan or join his employer's scheme, and should establish whether his employer will contribute. He would not turn down a pay rise, so why turn down pension contributions?

The golden rule of pension planning is to start early, so even if Andy can save only a small amount, he should.

Joanne Cox is an adviser with Co-operative Bank Financial Advisers.

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