Wealth Check: 'I need to save up enough to open my own skate shop'
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Your support makes all the difference.Nik Jones, 22, is fresh out of Camberwell College of Arts in south-east London. He studied fine art, and like many graduates is trying to forge a path forward in a shrunken job market. Aside from working weekend shifts at the Saatchi Gallery, Nik runs skateboard and video production workshops for the local council. He recently began making T-shirts as a side project, but his dream is to run his own a skateboard shop.
He says: "My problem is that the areas of employment I am set on are not financially secure ones. I don't know if I will ever be able to save up enough money to be financially secure, let alone afford a property."
Nik's wage is enough for now because he lives with his parents, but he hopes to one day have a family, a property and a generous retirement fund.
Case notes
Annual income: Nick earns £9,400
Savings: He has savings of £420 with Halifax
Monthly outgoings: His spends around £610 a month
Student loan: He took out a loan of £26,000
Advising him this week are Jason Witcombe from Evolve Financial Planning, Darius McDermott from Chelsea Financial Services and Robin Keyte from Towers of Taunton...
Employment
Nik juggles several interesting jobs, but if he wants to pay off his debt and get some savings he needs to find a way of earning serious money.
"It is not through lack of enthusiasm and determination he has yet to land a decent wage," says McDermott. "He appears just not to be looking in the right places."
Since well-paid jobs in the art world are scarce, McDermott recommends taking something else temporarily while keeping an eye out for opportunities in the areas Nik enjoys.
Business
Creating a business is a gamble because the failure of start-ups is so high, and could end up plunging Nik into further debt.
But Witcombe says: "If you believe 100 per cent in your own abilities – and you have to do this if you are setting up a business – then it follows that, in theory, the best investment you can possibly make is in yourself."
Since it's a little ambitious at this stage to think about buying a shop, Keyte suggests working on the T-shirt project, which would be an excellent way to learn business skills and perhaps make a profit.
He says: "Right now it is important to keep costs to a minimum so working from home, perhaps using the internet as your online retail space, is probably the way to go for now."
Should Nik's business prosper, it could still be vulnerable to failure even 20 years down the line – which is why he should also invest retirement money and savings elsewhere.
"We often hear people saying 'my business is my pension'," says Witcombe. "But all it takes if one event – perhaps a change to tax rules, a competitor bringing out a better product or a global credit crunch – and suddenly your business isn't worth what you thought it was."
Debt
Nik will have trouble paying off his large student debt with his modest income, but that's not an immediate problem. "Luckily for Nik the interest charged on student loans is low," says McDermott. "He will not have a spiralling circle of debt that is so often the case when people have amassed large loans or overdrafts with commercial banks."
His main priority now should be to live within his means and not take out further loans.
Pension
Nik hopes to save up £1m for retirement, but he needs to have a serious think about where that money would come from.
"To receive a modest pension income of just £10,000 per annum he would already need to be contributing £352 a month," says McDermott.
Property
Most people would prefer to be paying into a mortgage instead of channelling their hard-earned cash into a landlord's pocket.
If Nik wants to go down this route, Keyte predicts he'd have to raise a deposit of ten per cent of a property value to get a mortgage – which could be as much as £20,000.
For a free financial check-up, write to Wealth Check, The Independent, 2 Derry Street, London W8 5HF; or email wealthcheck@independent.co.uk.
Case notes Nik Jones, 22
Annual income: Nick earns £9,400
Savings: He has savings of £420 with Halifax
Monthly outgoings: His spends around £610 a month
Student loan: He took out a loan of £26,000
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