WWYD - Nephew spending life savings on day to day costs/ presents

[TurnThisStupidFatRatYellow]

This is a bit long, but don't want to drip feed.

Nephew is 21 years old. He works full time and has around £1200 after bills as spending money. He lives with his mother. He pays rent, phone, food, car insurance etc. The 1200 is after all expenses . We're very close.

He has £30k in life savings, partly due to an inheritance, but mostly due to his mother saving all his life, by making sacrifices and investing as well as she could for him. The intention for the money is for him to use it for something "proper" e.g deposit for his first house/go to uni / experiences if a life time/driving lessons etc. this is to get him out of the low income family situation my sister and I are in. She wants him to move out if the social housing and UC cycle. So has saved every spare pound for him. I am fortunate to have moved away from social housing and with my husband we're both working full time and have a modest mortgage etc.

The money is in my name, because he asked that at 18 he didn't have "direct" access to it.
I always told him I would give it to him without questions, as it's his money. He's been dipping into it for things like driving lessons and tests, a 3 month trip to Asia, a training course... all "proper" things.

He somehow manages to spend all of his £1200 on crap. Like Uber eats and the pub, taking his girlfriend out to cinema etc. It's all his money and he earns it and pays his bills. So who cares if he's spending it all? But it is relevant that he has more than enough spending money each month.
His girlfriend earns more than him,and pays £200 to her mother and ends up with about £1.8kna month. Which she seems to be able to spend just as easily as he does his money! She complains that she has to give her mum the £200. Nephew has never once complained not missed any payments.

He has now requested £1500 from these savings, to buy his girlfriend some presents (she's 19) from his savings. Because he "wants to spoil her". I have sent him his money, it is his after all, he's an adult, it's not for me to withhold it. I didn't ask him the reasons, he told me why without prompting.

Now, the WWYD is...

Would you "have a word" with him about spending money like this when it isn't supposed to be for him to fritter away on girlfriends/going out for a fancy meal... Especially as he has SO MUCH money each month spare. Or would you let it slide, and then if it happens again then say something? Or just hand it over every time?

I'm in a conundrum.

Why doesn’t he put it in longer term savings accounts that he can’t access (in his name) suggesting he keeps it for a house deposit or similar. He can get a better interest rate then too

and keep some more accessible

If this 1500 was the first time he's asked for it from his savings, I think I would let it go. But if it carries on and he asks again, I would say something. I get it's his money, and it's up to him what he spends it on - but I think a chat about what it was actually intended for in the long run wouldn't go amiss. He sounds like a decent lad though, and that he would understand why you were being cautious

He has put some into a LISA but it's limited.

He's unsure about what to do with the rest. I've shown him options, but he's a bit overwhelmed with the choices.

Unless he has additional needs and you have some legal capacity it is his money and you should transfer it all into his accounts.

Chat to him about the sacrifices his mother made. If he still wants to release the money this time .

Crikey what a spender! He’s an adult but I definitely would be having a word. If it fell on deaf ears then I’d say I’d no longer be looking after it. When he’s got nothing left it will be OP’s fault for giving it to him.
My loving dh could afford but wouldn’t spoil me with £1500 worth of gifts and neither would I want him to.
Is his mother aware of his dipping into the savings?

I would say something OP. Doesn't have to be a big deal, just remind him of the sacrifices his mum made to save that money and he should be adding to it not taking away.

He’s asked OP to look after it.

I would have a word with him about saving more / not spending all the money. Sounds like he’s already used up quite a bit of it on different things,

OP your nephew is beyond lucky to have such a supportive family. I would tell your sister, so you both can support his financial spending and decisions. I wouldn't give him any more money. He has more than enough to live off, from his disposable income. The reality of the matter is you've been trusted with the money and once it's gone, the onus will be on you "the adult who should have known better."

He needs to truly understand the sacrifices his mum made, to even save that type of money. Especially when that was money that could have been used at the time. But she was determined to break that cycle for him. Hats off to her!

Most people are not receiving an inheritance and are one or two paychecks away from living on the bread line. Breaking that low income/universal credit cycle can be hard and he doesn't understand this because he is only 21.

Honestly I would have a chat to him. Ds1 is home from uni, has been paying into his LISA since 18 and is now saving hard for a house deposit. He knows that house prices are pretty much going in one direction and his graduate salary will only get him so much for a mortgage. That means what he saves in his LISA and ISA is the thing that gives him more choice on what he buys.

He has a mate who didn't go to uni and who has worked for the last 3 plus years and who only has about £2k in savings despite having no car and not paying any rent. He realises he blew it all on complete crap and regrets his choices.

It is possible that your sister hasn't talked to her son about the realities of what mortgage he could get on his salary. I would sit down with him and talk about mortgages and run his salary through a mortgage calculator add his savings to that amount and put that into Rightmove in his local area to show what he can afford. That might help focus his mind a bit more and then he can see that building the savings gives him more choice.

He doesn't want the money in his name, he specifically moved it to my accounts so he didn't have direct access - He's trying to be sensible and cautious.

If he's trying to be sensible I'd tell him spending over a grand on his 19 year old girlfriend who he's likely not to be with in 5 years time is a stupid idea.

If he's chosen you to safeguard the money, then you should safeguard it. Handing it over every time he asks with no questions isn't doing the job he's given you.

Having been young and crap with money, I do remember being told that it’s comparatively hard to earn money and incredibly easy to get rid of it. And to try to find a balance. £1500 is more than his entire monthly spends. Surely his girlfriend wouldn’t want him to spend that much? It will take him months to replace it if he should ever want to.

Well at that age spending that sort of money on a GF is ridiculous. They are both very bad with money. I would say something, he may take zero notice but you have actually spelled it out and if he then messes up you have a clear conscience that you attempted to spell out the realities of life.

His mum is aware and disapproves on this occasions - but also feels the same as me in a bit of a dilemma. He gets defensive if she tries to talk to him about his spending (this savings spend aside) - so she finds it hard. And it is hard, they are his wages that he's earned and he pays all his bills on time and without question. He will also help with unexpected/unplanned costs like ... the fridge freezer broke, and he paid half of it etc. So its really hard when he's so responsible, but also has money burning a hole in his pocket, and he has the "safety net" of these savings :(

We could speak about the c.£10k that was from Grandad and that's his 'fun' money? an the £20k from his mum is 'proper' ... ? I don't know ..

But, on the other hand, he's an adult and it's his money - he could easily request all of it or lie to me about the reasons. (He would never do that, he's a decent lad)

Is it for me to approve/say 'yes you may have your money for this' or 'no, imo it's not worth it, you can't have it'? - the buffer of him having to ask me to transfer it is enough for pause. And up until now he's used it sensibly.

I don’t think you should tell him not to spend on his gf as that will go down as a tonne of bricks.

BUT
i think you are right to be concerned and that his is too immature to use the money in a prudent way
Driving lessons are a reasonable
spend. Some travelling too.
but he also needs to learn how to save and prepare for the future.

so you are right to be involved.

And maybe that should happen with a financial advisor.

what about showing him how much he will need as a deposit for a house.

show him what he can buy now, or what he needs to work towards.
if he isn’t ready to buy a house then the savings should be put into a longer term saving account so it can be used in the way his determined and hardworking mother intended.

not only that I would suggest that he needs to be allocating from his earnings a certain amount to short term savings, long term savings, and pension. I would encourage him to set his account up so that he has a certain percentage going into each of these with every pay check.

I have been told that you should start all of these things when you have only a little bit of income, because it gets harder to prioritise those the more used to spending all that you have is, and that it’s harder to start saving when you have lots coming in because you have already got used to spending it.

I wish I had been given this advice and guidance .
my parents didn’t and I was clueless and I’ve ended up at 47 with no pension (self employed) and no significant savings.
i Wasn’t a massive spender, instead focused on living on very little and doing the (creative) work I liked rather than being more mindful about increasing my earning power.
were I earning a good living when I were younger, then I would have hoped someone would have helped me learn some financial management.

it is indeed a stupid idea. He's unlikely to be with her this time next year tbh, she's off to uni in September in Scotland (We're in Dorset!) - which is why it;s so painful and such a dilemma!

But then we were all young, stupid and in love once and in hindsight, maybe I shouldn't have spent XXX on my boyfriend at 20, or gone to the clubs every Friday and Saturday and drunk through £150 a weekend ... but we live and we learn ...

It’s difficult. There was an interesting thread a few weeks ago, in which a poster and her DH were disagreeing on savings accounts for their kids, which they’d have access to when they turned 18. Several of us said it was risky letting kids get their hands on a stack of cash at 18, in case they squandered it. But most posters felt that if kids were brought up properly they’d be sensible and save the money for a house deposit etc. Sadly this thread seems to prove that even sensible well brought up kids can throw their money away. It doesn’t have to be on drugs and crap - just general life.

I would speak to him OP, explain what the money was intended for , and remind him that when it’s gone it’s gone, and he’ll never have that amount of ready cash again. But ultimately it’s his choice. Which is why I’d never give someone so young a lump sum.

It seems to me there is no point in you holding it if you hand it over every time without any discussion.

It might help if he had a real ambition for what to do with the pot. A burning desire to buy a house with it, coupled with some knowledge of how much it costs in fees and deposit to buy a flat, might be a more powerful motivator than being told to stop frittering it.

I'd have a word and say that he's obviously trusted you with the money because he doesn't trust himself (you don't necessarily have to be quite that blunt!)... and therefore it's your job to point out when you feel he might not be using the money wisely (and presents fall into that category).

If he's finding investment options overwhelming, perhaps it might be worth suggesting an advisor or accompanying him to an appointment with the bank to discuss? Additionally, it would definitely be worth trying to point out that he could easily save a great deal (still retaining disposable fun money) if he chooses. I realise these things sound obvious, but he does sound financially naive and in need of guidance...

Could you say “I disagree with how you are spending the money that your mum worked so hard for. I need you to either listen to me when I say so or take it all back into your account, so that I am not talking to a brick wall”

Would that give him pause?

How much of the £30k is left? Does he know how much is left? When he asks for money, do you give him a running total of what he's spent so far?

Have you pointed out that £1500 is 5% of his total original savings (and whatever percent it is of the remaining savings)? Spending 5% of your net worth on 'spoiling' someone for no particular reason is crazy.

You need to sit down with him, apologise for not doing the job he gave you, and work out between you how you will do better in future. Help him budget, understand what his spending goes on, add to his savings instead of depleting them, and make a proper financial plan.

I would have a word yes - because I think future him will thank you. He has poor spending habits and has the chance to learn better ones.
Rather than give him all the options, I would present a proposed plan to him and offer to do the majority of the leg work in setting it up.
I would suggest putting this money away in limited access for a period of time and learning to use his excess monthly money to both add to it and build up a savings pot to fund the kind of expenses he is currently dipping into the fund for.