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Trip of a lifetime can be hassle-free

WITH many companies looking to shed staff rather than take people on, it might seem a bad time to be working in recruitment. But 24- year-old Gavin Cox works in the public sector which, because of increased government spending, is experiencing rapid growth.

Despite this, Gavin wants to take time off work to go travelling. He says: "My boss has agreed that I can take six months off and come back to my job, which is great. I plan to leave at the end of the year and spend most of my time in Asia and Australia."

The problem

Gavin needs to save around pounds 7,000 to finance his trip. He says: "I have pounds 3,000 in the bank but I'd like to have that to come back to. I know I will need to cut down on my spending but it will be worth it.

"I'd also like to get some advice on what I need to do with my finances while I am away - like the best way for me to get access to my money from abroad."

Gavin also wants to ensure he is making the best use of his savings.

He says: "I don't know what I should do with the money I have in the bank.

I also want to know if I should join the company pension scheme.

When I get back from my trip I will have been with the firm for more than two years - at that point, they start making contributions on your behalf into a stakeholder pension.

Is it worth me joining the scheme?"

The solution

Gavin will need to be very disciplined to save the money he needs for travelling. Nikki Foster, of Chase de Vere, an independent financial adviser, says: "Gavin has just three months to go until the end of the year and has some way to go before reaching his target of pounds 7,000.

"He should set up a standing order from his current account after each payday and put it into Northern Rock's Online Tracker account. It pays 4.5 per cent interest before tax - a very competitive rate."

Gavin should move the pounds 3,000 he has in his bank account to an account paying better interest. Ben Yearsley, of Hargreaves Lansdown, an independent financial adviser, says: "Gavin's money is earning little interest where it is and he should consider moving it into a mini cash-Isa. C&G's mini cash-Isa, which has a minimum balance of pounds 100, is currently paying the best rate - 4.5 per cent. The good thing about keeping the money in cash is that Gavin will be able to withdraw it if he runs out of money while he is travelling."

Yearsley says Gavin should consider getting online access to all his accounts so that he can manage his money while he is travelling. He says: "Charges for withdrawing money when you are abroad are usually high. Credit card companies, for example, typically charge up to 2.75 per cent on every purchase.

Gavin should consider a Nationwide credit card, as this is one of the few cards that does not levy these charges."

Travel cover is also very important.

Foster says: "The best deals can often be found over the internet but Gavin should read the small print so that he knows exactly what he is covered for. The last thing you want is to find your insurance does not cover the treatment you need when you are far away from home."

Gavin should also pay off his Barclaycard.

Yearsley says: "He has pounds 3,000 sitting in the bank and yet is paying 18.7 per cent in interest on the pounds 250 he owes Barclaycard. It doesn't make sense.

He should pay off what he owes straight away and cut up the card as it charges very high interest rates."

Foster says Legal and General is a good Isa provider so he does not need to think about moving this money for now. She says: "He will probably have lost money over the past few months but he shouldn't worry about this as it is a long-term investment. He must, however, regularly review the fund's performance to make sure it is doing well compared with other similar funds.

"He should join the company's stakeholder pension scheme when he gets back from his travels. Stakeholder pensions have very low costs and are a great way to save for retirement - as his company will make contributions too, his retirement fund should grow quickly."

Where the money goes

Name: Gavin Cox Age: 24 Lives: Highams Park, north London Occupation: Recruitment consultant Status: single Income: pounds 30,000 - pounds 40,000 Rent: pounds 270 a month Spends: pounds 400 a month going out; pounds 300 a month on clothes; pounds 2,000 a year on holidays Debt: pounds 250 on Barclaycard; pounds 4,500 student loan Savings: pounds 3,000 in a Barclays current account; pounds 3,000 in a share Isa with Legal and General

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Email editor@thisismoney.co.uk Gavin Cox is taking time out from his job to go travelling - our Money Makeover experts say he should both save for his trip and plan for the future.