‘Living expenses whittle away savings’

Having reached the age of 30, and with a four-year-old son, Phil Wilkinson feels now is the time to start planning seriously for the future. He is keen to build a nest egg that will cover the deposit on a property in his home town of Hull.

Phil Wilkinson, with his son Luke, 4, wants advice on how he can start saving.

“I am hoping for a pay rise shortly, although I can’t be sure of it. That would make all the difference because right now, despite my best efforts, I’m really struggling to save. I intend to put aside £100 to £200 a month, but living expenses whittle that away to nothing.”

Phil works as a service and repair administrator, organising engineers who work with heavy-duty garage doors on warehouses and dealing with invoices.

He recently took his first holiday of the year when he took his son, Luke, to a caravan holiday park in the Primrose Valley near Scarborough.

When he’s not working or spending time with Luke, Phil sings in a band.

He says: “We are called Battalions and have been described as a bluesinfluenced heavy metal group. I do the vocals and we pick up gigs everywhere and anywhere. Or at least we try to.”

My credit rating has got a lot better and I only owe about £400 now

Phil rents with two friends, paying £166 a month for his share of a three-bedroom semi. He has all the usual outgoings including groceries, insurance, TV licence, Netflix and gym fees, and a £50 a month credit-card bill.

He has a Capital One credit card, which he pays 31.1 per cent interest on. This was the best he could get because he has a poor credit rating. However, things are improving.

“My credit rating has got a lot better and I only owe about £400 now. I’m more positive about my finances in general, especially with the pay rise on the horizon,” he says.

“I also have an overdraft in place with my Halifax current account, which I would pay £1 a day on if I used it, which I don’t and haven’t for years now.”

Phil says his main goal is to save enough money to get on to the property ladder. He says: “I would welcome advice on where to put my money. I genuinely don’t know what the best options are, and whether to opt for standard savings accounts or Isas.

“There’s a lot of advice out there in the media, but I really want an expert to guide me through to the best solution.

“If I can’t start saving and maximise what I put aside each month, building up a deposit is not going to happen.”

Phil’s employer has just joined the government’s auto-enrolment scheme, so from next month he will be paying into a workplace pension for the first time.

He says: “I will consider adding my own extra voluntary contributions, but I want to allow time for my finances to settle down first.”


Louise Halliwell, the senior product manager at Yorkshire Building Society
“Phil should go through his bank statements to review his monthly outgoings. For example, does he get value from his gym membership, or can he transfer his credit card balance to one with 0 per cent interest now that he has a better credit rating? This will also help him to understand how much of a surplus he has after expenditure, and this is the figure he should try to save every month.

“Phil could consider using a direct debit or standing order to transfer that money into a savings account on the day he gets paid — that way he’s less likely to spend it.

“If he’s saving for a home, Phil should check to see if he’s eligible for a Help to Buy Isa because the government will add 25 per cent to whatever he manages to put away. He can pay in up to £1,000 on opening the account and then up to £200 a month to receive a bonus of up to £3,000 when he buys his first home, plus the interest.

“Alternatively, regular savings accounts are a great way of establishing a savings habit and typically pay good rates of interest, although the amount you can put away is usually capped at £250 a month for only 12 months.”

“As with the rest of the economy, Brexit has resulted in uncertainty for mortgage and savings rates. But anyone who is considering getting a mortgage or renewing their existing one is still in a fairly strong position because mortgage rates remain at all-time record lows.”

Andrew Bentham, a senior mortgage and protection adviser at Reeds Rains in Preston
“Phil is right to think about savings because he’ll need them not only for a mortgage deposit but also forthe associated costs of buying a property. The more he saves, the greater choice he’ll have of home loans. If he fears he may not be able to raise a big enough deposit, Phil should think about whether he might be able to get help from others. He should also find out about some new 100 per cent mortgages, which don’t require a personal deposit if you have backing from relatives or friends.

“When choosing a property, Phil should think about budgeting and future outgoings, from commuting to utility bills, food, entertainment and holidays — it all has to be accounted for against income, and being able to demonstrate that he has considered this will help when gaining professional advice.”

James Jones, the head of consumer affairs at Experian
“Phil could improve his credit rating and his overall position by clearing the expensive credit-card debt, so this should be his top priority. A stronger rating will improve his chances of securing a competitively priced mortgage. He should also shop around to get better deals on existing products such as his mobile phone, TV/broadband and energy, which could help boost his disposable income and the amount he can afford to squirrel away each month towards the deposit for a property.

“A snapshot of your credit report is available from many sources, along with guidance on dealing with any discrepancies and identifying ways you can improve the picture these reports paint. Getting on to the electoral roll is an well-documented easy win, as is breaking any ties with an ex-partner, particularly if they have a poor credit rating.

“Mortgage lenders scrutinise their applicants’ financial behaviour much more closely than they used to, so it’s wise to avoid applying for other credit products in the six months before a mortgage application.”

Phil’s response
“This is really good advice and the experts’ opinions have given me a lot to consider. There was a lot there that I only half-knew previously, which is why expert help is so valuable. For example, I was well aware of Isas, but not Help to Buy Isas, which will be worth investigating.”