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.

We have spoken to him about the mortgage and deposit. He was interested about a year ago to moving out of home - so we sat down and said "well, don't forget you easily have a 10%+ deposit" and showed him how much he could borrow for mortgage - but, again he was overwhelmed really and didn't want to make a decision. he looked at renting rooms out, and then realise he wasn't so bad off at home after all LOL.

He has put the max into a LISA for this year (from these savings), and will do so again next year. He pays into a pension. He does not really save month to month otherwise - hence wanting this lump sum for presents...

To his credit, he has actually reduced his spending ( .. I know...) he was using a credit card before - got himself to £1.2k on there, bank took £800 out or something, panicked and asked his mum what to do and she helped him. We all sat down and worked out a new plan. He moved some money over from these savings to "tide him over" so he could pay his bills etc. Then he was very good and paid the next £400 after his next pay day and gave his credit card to his mum. He used this to pay for Asia and then paid it off with the savings immediately etc.
He and I looked into his monthly spends, as he did not know where his moeny was going. We had a very honest look through his bank account - did a spreadsheet. He did not realise he was spending £12-15 A DAY at a work on his lunches/snacks, as he was spending £4.90 on sandwich, £2.50 on a bottle of Pepsi, maybe £1 on pack of crisps etc, that was a shock to him. And since then he has been taking packed lunches and buying big bottles of Pepsi and decanting into a small bottle.

So now he's nit using the credit card each month, great... but he still spends all his money (just not all + Credit) - so maybe we need another sit down and look at where his money is going (even though I already know it's buying her a McDonald's, him buying himself a takeaway on the way home at £20 instead of eating the dinner his mother made and put by for him, using an uber instead of walking the 1.5miles home that kind of thing)

i think i might suggest putting it a way in a notice account, so he has to give 30 days notice or whatever to access the money ...

Yes he knows the total. £30k is what is left - and now wants to take £1.5k out of that

So he had something like £37.5k at 18. He has spent £7.5k of it

• £4k gone into LISA (this year)
• £1k on driving lessons, tests and car insurance
• £500 on the Asia trip as spending money (he had saved up for the trip otherwise)
• £1.5k on a Macbook to last him forever!
• £500 on a training course

i know.

the thing is, he CAN save - he paid for most of his Asia trip with his wages - he used about £500 for spending money so he could really enjoy himself and do the adventure stuff if he wanted, which is fair enough I think.

its just hard to watch him "throw" his money away each month knowing what it's like to grow up poor, and even if he had saved £100 a month since working he'd easily have got £3k+ added to his savings

The money into the LISA isn’t really spent, though. So it’s only £3.5k “gone”, most of which seems to have been spent relatively sensibly.

I’d be suggesting to him that he might want to set up a savings account from his salary for “fun” money - say, put £200/month in - then he still has this fund when he needs to

The £4 in the LISA isn't spent. That's still saved. And better - it's grown.

The Macbook definitely won't last forever! He needs disabusing of that notion - tech spend counts as consumables, and should come from income. Savings should be used for investment in assets with long term or permanent value (like training and his driving qualification).

So actually he's not done too badly up to now. And the change to credit card use shows he is open to learning and improving. He just needs a few more chats. Learning about finances can be overwhelming, at first but repetition helps - a bit more becomes clear each time.

my daughter is 6 and all her savings are in my name for this very reason! She won't get instant access at 18. She will know about the money of course, but it won't be handed over willy-nilly!

well i say spent - but it's not instant access, so he has acces to £30k - was just trying to make it clear where his savings have goen so far.

Yes, the macbook wont; last forever, but it was his "impulse" buy upon receiving £10k from his granddad - it wasn't a terrible purchase - he uses it every day and does editing on it and stuff and will last a good fair while (longer than 3 x £500 laptops would anyway)

I would. I think a chat about money for the future, investing it so it grows, living within means etc is something he needs to hear.

Could you do some research and suggest a fixed term ISA for him?
That way, his money would be earning interest,and would be locked in for a fixed period.

Try to persuade him to set up a standing order from his current account to another new savings account, say about £200, to go out of his current account the day after his pay goes in.
Then those savings will be entirely his to manage - he will learn how to save as well as how to spend.
Then the savings you hold for him are not to be touched any further, unless it is for a house deposit.

In your shoes, I would flat out refuse to give him £1.5k to spend on a girlfriend right now. But be tactful - beware it doesn't backfire and he demands the whole lot be returned to him.
Instead, persuade him it would be a better idea to spend it on her Christmas presents and having a great time together after her first term at uni.
Hopefully by then they will have broken up, or if he sets up his own monthly savings as I described, he can spend that on her.

Yes, another chat is definitely needed.

He definitely feels the need to spend money so "he's interesting" for his girlfriend. We've talked to him about how she's so googly-eyed for him, he could buy her stale bread and she'd be amazed. She's a nice girl too. But he feels like he has to shower her with stuff to "prove" how much he loves her (ah the foolishness of youth)

Having seen the updates he needs helping out. Would you be happy doing the legwork for him? Sit with him again, get a standing order going out of his account the minute his wages hit to transfer money into a savings account so he cannot access it.

He could also look at something like a Monzo account that allows pots of money for different things. My children had this for university so they could control their spending because you can see what pot it came out of. That way he can save toward the new macbook for when his dies. That is then separate to any other savings.

He would also do well with some kind of app meaning when he spends he has to keep a record of where it was and can see how much he is spending on takeaways.

Maybe the chat is about how thoughtful beats expensive? Remembering and buying her fave chocolate or flowers or print of her fave picture, say?

I haven’t spent much more than £1.5k total on presents for DH in 20 years: definitely not if we exclude his wedding ring that was a few hundred!

Yes, definitely willing to do the leg work here. I'll call him over and we can work a plan out.

That's excellent.

You've already managed the first step - living within his means. I'd suggest the next one is paying himself first - so as soon as his salary lands in his bank account, he has direct debits set up to pay all essential bills and to pay into his savings (doesn't have to be a large amount to start with - it's building the habit that matters). Then what's left over is for spending. Rather than spending freely and only saving what's left over.

Then work on tracking spending, to see if there's more he could save comfortably. You Need a Bydget seems a popular app. And working out what to do with the savings - short, medium and long term goals, with a pot allocated for each one.

You have mentioned that he lives with his mum who wants to get him out of the universal credit / social housing cycle.
Also you have said he doesn't want the money is his name.
I think this could look a little suspect / dodgy, like he is trying to hide how much money he is bringing into the home and how much he has in savings.
I personally wouldn't involve myself in such a situation and would just get all of his money out of my name.
It may all be completely innocent but I wouldn't risk it.

This is a difficult one because he’s asked you to take care of the money for a reason. Reason being he doesn’t trust himself not to fritter it away so really you have a moral obligation to advise him as best as you can.

obviously it’s his money, he’s an adult etc etc you can’t withold it but you can advise him. I’d put it across to him in that way

“you asked me to look after your money for a reason and I’m assuming that’s because you want me to advise you of your not being sensible right”?!

then if he agrees just have an open convo about how you and his mum want better for him and he needs this money to get a good start ln life and his mum hasn’t scrimped and saved all their life and missed “treats” and fancy meals herself so he can spend it on his gf!! Actually writing this is be fuming if he was my son lol

I would say something now. If he keeps asking for money I would either transfer the full amount back to him or suggest his mum takes over the role of safeguarding it. You are in a no-win situation, he wants you to protect his money presumably from him, knowing full well that you do not have the power to do so. He'll keep spending and you will get the blame.

If it was me I'd strongly suggest to him he puts at least half of it into an isa. You can put up to 20k a year.

Yes definately speak to him. At his age he's not thinking long term, slthough he's an adult so wont makev the best decisions. Maybe get him to speak to a financial advisor. It's quite a lot of money and while he probably won't buy a house for next 10-15 years... he should invest and forget about it and if invested well could set him up with deposit for a house. Frittering it away would be a waste...

Apart from the most recent gift expenditure everything else is sensible and goes towards mums goals.
Driving lessons gives you independence and a wider area to cast your job hunting net.
Asia trip - cultural capital and exposure to different cultures is important too.
MacBook good quality tech, one off consumables

You need to get better at challenging him, that's the job he has given you.
When he came to you for the £1.5k I would have recognized how generous he was being, then suggested £200 which is still very generous and reminded him that large gifts can make people feel uncomfortable because they can't reciprocate, and he would want his GF to feel bad would he?

I'd put it in bonds for him if he agrees, locked away for 5, 4, 3,2,1 years and on its maturity siphon £4k into the Lisa and the left over from that bond is spends / reinvested.

Sounds like you've already done this, but he needs help to develop good saving and budgeting behaviours now. We're so financially illiterate in this country with huge dependence on credit that if he's fortunate enough to have someone guide him at his age he will 100% thank you later. He also needs to learn that love and spending money are not synonymous - he's worthy of being considered interesting and lovable by girlfriends whether he spends £150 on his gf or £1.5k.

How on earth does he manage to spend around £50 a day on Uber Eats and the cinema?!