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DS18 and £20,000 junior ISA - any advice on what to advise him?

(27 Posts)
SweetDaff Wed 10-Apr-19 15:21:23

My son is due a child investment ISA inheritance at 18. Which is in about 18 months time. This is due to his grandmother putting some money in every month over the years. The investment child ISA grew significantly.

I should add that we are a low-income family, live in a council flat etc, so this is a lot of money! I think I got £20 on my 18th birthday!! hmm.

However, there is a good chance he will still be is school at 18. In some ways he is fairly careful with money, but is can also be an irresponsible nightmare at times; loves clothes, designer ones I'm afraid. Which I think is completely ridiculous at his age and income, but moving on ...

The windfall is too little to be life-changing. But it is a great lump sum to have in the background for sure. It would be a shame though if it made him lazy, or he just wittered it all away.

Anyone been in this position? Any advice?

I was thinking of posting this in AIBU, but maybe Teenagers is better?

OP’s posts: |
MyDcAreMarvel Wed 10-Apr-19 15:24:41

Does he know about it? If not I wouldn’t tell him until he is older at least after leaving uni.

Hellohah Wed 10-Apr-19 15:28:15

What is he planning on doing at 18?
I have been saving for DS, and he'll have about £15k when he's 18. My original thought was that he could use it and go travelling, as he's always talked about that, but recently he has been making a little noise about the possibility of applying to Oxford (bless him). It's a long way off for him yet, but actually the money would probably be used for University, if he got in, as looking at finances he would rather know he's comfortable than struggling. I'm low income(ish) too - so couldn't afford to subsidise much through University (maybe about £50/month).
He is great with money too - I'm a spender, hence why I liked the idea of travelling. I'd rather enjoy it haha and wish I'd had the chance to travel the world.

OliviaCat Wed 10-Apr-19 15:30:22

I'm in a similar position. I wonder I feel you can get away with just not telling them until they are about 34... wink

ShallICompareTheeToASummersDay Wed 10-Apr-19 15:35:34

My great gran would always tell us “spend some, save some, keep some in your pocket” which basically means let him blow some money (maybe £1k?) put some out of reach in a different savings account (house deposit etc) and keep some in hand (maybe for a car, travelling etc)

safariboot Wed 10-Apr-19 15:37:41

I think most people if they got a windfall at 18 would blow it.

If it was my son I'd try and persuade him to take at least some as a monthly amount for a few years. Be good funding through university if he goes, or a bonus to his earnings if he's working.

Also depending on where you live, it might be well worth using say £5000 to fund driving lessons then car and insurance.

Sunseed Wed 10-Apr-19 15:38:11

Can he be persuaded to take the long term view? If he can see how the investment has been accumulated and grown over time up to now, might he be encouraged to consider that even if he doesn't add more contributions it would be forecast to grow to £xxx in say 5 or 10 years' time.

HoneysuckIejasmine Wed 10-Apr-19 15:39:11

The key question, as pp said, is does he know?

We're saving at the moment and both kids should have a similar lump sum when they turn 18. They are preschool age now and our current plan is not to tell them! Not until we know their character well.

I inherited a similar lump sum which was enough for a house deposit a year after uni. It's life-changing. Protect it as much as possible.

Littleraindrop15 Wed 10-Apr-19 15:43:36

I would tell him to keep it and continue to add it for a deposit for a house or something.

If he doesn't know about it I'd let him continue living as is and when he seems ready to let him know

79problems Wed 10-Apr-19 15:44:59

Don’t tell him.

AliMonkey Wed 10-Apr-19 15:53:57

For those saying don't tell him, you can't. It is in his name and he can take it out and do what he likes with it once he is 18. If he does nothing, it will turn into an adult ISA.

We have pur money away each month in a child trust fund for our DC but along the way have had lots of conversations about " what if they choose to blow it all?" My thinking has always been that if we bring them up properly they won't but it's yet to be tested!

All you can do is guide him and it depends a lot on what he plans to do at 18, eg job, college, uni. If he doesn't need it to fund his education then I would encourage him to save at least half towards eg deposit in a flat, treat himself with eg £500-£1000 for clothes or a holiday then use the rest for vaguely sensible things eg a car or a season ticket for train to work. If you sit down with him and talk about how much he might need in future for rent or deposit or car then hopefully he will choose not to blow it all now!

Bigearringsbigsmile Wed 10-Apr-19 15:57:32

My son is 19 and his ISA was put into his name last year. he hasn't touched. he knows that if he wants to go to university this year, that money will be his uni money. it will pay for his accommodation at the very least.
You need to have a conversation with him. if he doesn't want to go to uni, talk about house deposits etc.

MiniMum97 Wed 10-Apr-19 16:01:52

Save it for a house deposit. It's very hard for young people to save enough to buy a house so this gives him a head start. Put the money gradually into a LISA and the government will add 25%:

https://www.moneysavingexpert.com/savings/lifetime-isas/

DontCallMeCharlotte Wed 10-Apr-19 16:05:50

I would suggest transferring it to an adult investment but having maybe £1000 to blow now? (i.e. to get it out of his system)

stucknoue Wed 10-Apr-19 16:07:05

If he's planning on working and you aren't in London then a car might be something to buy, or where we live it's a house deposit on a 3 bed semi! (Not that an 18 year old needs one but he could invest?)

79problems Wed 10-Apr-19 16:11:54

Just because it’s in his name doesn’t mean you have to tell him!

NoSquirrels Wed 10-Apr-19 16:13:07

I disagree that it’s not a life-changing amount at 18 years old.

As a PP says, put it in a LISA and it will get topped up again by 25%. That’s huge.

It’s the start of a house deposit or funding for university or a course in the future.

I’d certainly discuss spending some, but I’d sit down and show him how long it would take to make that much money again on net wages and living costs etc.

NoSquirrels Wed 10-Apr-19 16:14:05

Just because it’s in his name doesn’t mean you have to tell him!

He’ll get the correspondence about it as soon as he’s 18.

Honestly, talking about it is better than hiding it!

3ChangingForNow Wed 10-Apr-19 16:20:42

I would make sure he knows the value of money. Show him what it costs to run a house. Help him make some long term plans. Get someone outside the family he trusts to talk about his options. Make it like a rite of passage. Show him with his career prospects how long it would take him to save that sort of sum. Go to Homebase and show him kitchens, look at rental properties and mortgages together. Talk about council tax etc. Basically just use it as an opportunity to show him the value of the money in the adult world and teach him about budgeting, long term planning etc.

I WISH someone had taken the time to show me all of that as a teenager. I am planning to do that for my children.

cdtaylornats Wed 10-Apr-19 17:51:02

If he is going to university then I would suggest take £5000 and buy a car/learn to drive. Use another £5000 for travel, books, deposit on a rental flat. Save £10000. That lets him spend but still have a basis for the future. Put the £10K in a 3-year term savings account.

SweetDaff Wed 10-Apr-19 19:49:44

Thanks for all your helpful points and pointers. V. interesting that I am not alone in wondering about all this.

Fairly recently I actually transferred a proportion of this junior investment ISA to a junior cash ISA. (You can have a maximum of 1 each, even though I had to argue with the building society I was proven right and this is a legal guideline by the government!). This is in case the stock market crashes so close to maturation, so all the money is not tied up in investments, but a large amount of it is in hard cash.

He is expecting some money, but doesn't know how much. In theory I could just tell him about the smaller sum, and not the money in the other junior ISA account until he's a bit older (say 21!!!!!!) I think I will see how things are at the time, and how mature he is, and where we're at (he's a bit of a nightmare teen at the moment, hence my lurking on this forum). A bit unsure, and kind of glad to see others have this dilemma. But I do also realise its really all his money at 18 : tricky one.

I definitely agree with splashing some of the cash smile. Maybe even me and granny might get a nice meal out somewhere hmm on the back of it.

Driving lessons yes possibly good idea. Car, notsomuch; I just think he's too headless-chicken to cope with the responsibility of driving at that age. Maybe I'll ask that on a separate thread nearer the time!

Possibly a deposit for a home sounds great, though it may still be out of reach in the South where we live. Yes thank you for pointing out how its a great idea for help with living expenses if he does decide to continue with Education. Its not something I'd really thought of.

I just don't want him to lie back and sit on his arse and think well thats great I don't have to do anything for a few years. Or go bonkers on designer clothes angry. Spending some of it on travel might be good, though my son doesn't seem the type, he never mentions it, but of course things can change.

All good ideas, so thanks for your thoughts.

OP’s posts: |
Rugbylife Wed 10-Apr-19 21:57:41

My son had a smaller inheritance £7500 once he became 18, he spent £1000 on car insurance, he’d already bought his car with a smaller amount that was in his normal savings when he passed his test. He had a European holiday with his mates then a trip to New Zealand for 3 weeks on his own. He had about £4000 left when he started University, he’s just finishing Y2 he’s 21 now and has nothing left but he’s not worked at all in this time. In hindsight I wish he’d kept the money he spent whilst at Uni as he’s nothing to show for it but I am glad he did a bit of traveling. Ds2 will get his in 18months which will be about £10000 I’m trying to convince him to save it for a house deposit but he’s a designer spender too, so could easily waste his money rapidly!

BrokenWing Wed 10-Apr-19 23:55:50

My niece got £15k on her 18th. She's 25 now, it's still in the bank and she's added to it hoping to buy her first home in the next couple of years.

Not all 18 years olds blow it.

grumiosmum Wed 17-Apr-19 18:33:34

We are in a similar position with DS, after I invested his child benefit.

I bent the truth a bit, and didn't tell him he could do anything he wanted with the money, but that it was a long-term investment for his future.

I got him to open a LISA. He is transferring £4k per year, to get the maximum benefit from the government. The rest stays in the Unit Trust, continuing to grow. It will take about 4 -5 years to fully transfer everything to the LISA. It should enable him to get a foothold on the property ladder with a reasonable deposit.

Sophiesdog11 Sun 21-Apr-19 09:20:22

In theory I could just tell him about the smaller sum, and not the money in the other junior ISA account

Unfortunately this isn’t possible. All financial institutions will write to your son as he approaches his 18th and your access from his accounts will be removed. It is impossible to keep it quiet and illegal anyway as it is his money.

Op,my 2 inherited over 100k at 18, primarily an inheritance plus some we had saved. Both are drip feeding it into S&S ISA and not touching it. But I second the LISA suggestion, we putting 4k of their ISA allowance into a LISA to get govt funding.

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