Wealth Check: Help me plan a future that's more stable

One young woman earns only £12,000 a year but she loves her work with horses. Now she needs a financial plan to start saving for a home and pension

Esther Wright is not sure where her love of horses came from. "My parents are teachers and not into horses at all," the 22-year-old stable-girl says. "But for some reason I was always interested in them. I got a pony when I was 10 and started riding horses at 14."

She grew up in Retford, in rural Nottinghamshire, and attended Elizabethan high school. Her family rented part of a field for her horse. She successfully applied for a course in equine studies at Coventry University but took a year out before starting. In that year she got a job at the stables of a famous trainer in Cheltenham, close to the racing course. She enjoyed herself so much she shelved her university plans and stayed at the stables a further two years.

In the summer of 2001, Ms Wright started as a broadcaster with Coral bookmakers in the East End of London. Her job was to read out the racing odds to the punters around the country over the PA system. But she found working in an office too claustrophobic and, yearning for the outdoors, returned to the stable job last summer.

There are 120 horses, with Ms Wright in direct charge of four of them. Her day starts at 6am when she mucks out the stables then rides the horses for exercise until midday. After lunch, she returns to the stables to feed the animals and makes sure they have enough hay and water. By 5pm, her duties are done. Her horses run in national hunt races and she has to travel around the country to the various meets whenever they compete. Each horse has seven races a year.

Ms Wright earns £1,000 a month, with free accommodation near the stables from her employer. Since this summer, she has been saving into an HSBC cash Isa which now stands at £1,500. "Although I'm relatively low-paid, I have few overheads and would like to maximise any spare money by setting up a pension as soon as possible," she says. Ms Wright has been told a stakeholder pension would be suitable but is unsure how to get one. "There seem to be so many different types. Is it best to approach a pension provider or a bank?"

Ms Wright drives a Citroen Saxo she has owned since 1997. "It's got 75,000 miles on the clock now and I'd like to replace it soon in case it breaks down." She would also like to buy a house but fears her salary is so low she has been priced out of the market. If she did find somewhere, she would have to put down a very large deposit for a mortgage. "I'd like to buy a place in Cheltenham but houses are so expensive here. I reckon I'd be looking at £100,000 for a one-bedroom flat."

We put her case to Milena Atanassova, spokeswoman for Rickman Tooze in London, David Bitner, head of product operations at The Market Place, Fergus Caheny, financial planner at Killik & Co, and Mark Loydall, director of Cambourne Financial Planning.

Profile: Esther Wright, 22

Status: Single;

Occupation: Stable-girl for horse trainer in Cheltenham;

Education: Elizabethan high school, Nottinghamshire. GCSEs and A-levels;

Income: £250 a week.

Debts: None.

Savings: £1,500 in a HSBC Isa;

Pension: None;

Stocks and shares: None;

Motoring: Citroen Saxo (1994);

Property: Free accommodation provided by employer; family home in Nottingham;

Outgoings: (Per month) car expenses £50; food £120; mobile phone £25; holidays £50; going out £30; Isa savings £500.

'Put away £500 a month and set up an Isa'

Solution 1: Savings

Mr Loydall says although Ms Wright does have a low salary, her accommodation is free, allowing her to save about half her income each month.

Mr Bitner says everyone should have three months' expenditure saved to cover the possibility of illness or unemployment. With no mortgage and minimal outgoings, she can use her Isa savings as her emergency fund.

Ms Atanassova warns that Ms Wright can contribute only £3,000 per annum into a cash Isa. This means she can only make six £500 payments. For the rest of the year she should open a savings account to accommodate the other monthly savings. Northern Rock's Tracker Online offers 4.15 per cent annual interest rate on balances of £1 and more. The deposit account is instant access and can be operated only over the internet. Ms Atanassova also says Ms Wright should do a budgeting exercise and list all outgoings against her weekly pay. This is useful in not only emphasising where her money is being spent, but also shows the amount of available income that can be saved.

Solution 2: Pension

Mr Bitner says that assuming Ms Wright's employer does not offer an occupational pension, a stakeholder would probably be suitable. They are flexible in that she can stop or vary contributions at any time without penalty. Mr Caheny agrees a stakeholder pension scheme could prove a good first step. She should consider paying £50 per month into her pension, which will represent just over 6 per cent of her income. It would be wise to shop around for her pension provider since several organisations promote stakeholder ones. Most schemes have similar charging and the only difference in cost will be the annual management charge, pegged at 1 per cent. Because of her age she could consider an equity-based fund.

Mr Loydall says that though there are no penalties for stopping a pension early, Ms Wright must be committed to funding one for a worthwhile retirement income. He also thinks Ms Wright should ask her employer if he will help the funding.

Ms Atanassova says Ms Wright should be wary of putting all her retirement eggs into one pension basket. Investors cannot get their money before 50 and they can take a maximum of only 25 per cent of their fund in cash.

Solution 3: House

Mr Bitner says Ms Wright's wages are likely to be a problem if she wants to buy a flat for £100,000. Someone who earns £12,000 a year and has no debt could secure a loan of four times their income. She would need a huge deposit to buy around the £100,000 mark, which seems unlikely. He suggests she consider buying with a friend and aim for slightly less expensive property.

Ms Atanassova says the average price of a small house in Cheltenham is £130,000. Ms Wright should consider buying further away, say in Churchdown, where prices are considerably lower. If Ms Wright intended to tap her savings for a deposit on a first house in less than five years she should avoid stock-market investments. The underlying volatility means that over a few years she may end up with less than the amount originally invested. But if she wants a lump sum as a deposit in the medium to long term and she is not adverse to investment risk, equity investments could be a good choice.

Solution 4: Car

Mr Loydall says Ms Wright must decide if she wishes a car loan or to pay cash and how much she expects to spend. He says there are good car-finance deals but it may be possible to do better, so she should always seek independent advice. It is unusual for an independent financial adviser to arrange car finance but they often know where the best deals can be found.

Ms Atanassova says Ms Wright should use the funds in her Isa as savings towards a new car.

If you would like to be given a financial health check-up, please write to: Wealth Check, 'The Independent', 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk.