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.

Put it into a cash isa , in his name, with limited access a year. He may find issues were you to die and it be treated as a gift. Why can't he live off his earnings and save the rest? That way he learns to budget.

Well it's not him treating his girlfriend, it is his mum treating his girlfriend

If he saved up for the gifts, that would be from him.

But she could have used it as a deposit herself to buy a property. Instead of scamming the system she could have modelled how to get out of it, and been building up equity in a house that eventually he could inherit.

I mean.. I asked him if he wanted to move it to a better account and he said no, he didn't know what to do, he wanted to keep it where it was. I pointed out that the savings rates were higher. He didn't want to make the decision. I told him it was a good idea to move it...he didn't want to.
Yes, I could just move it, but it's not my money or my choice. I remind him every few months that he can easily move it to a better account. But he's making the choice not to.

Which is why he needs a bit more direction and I need to give him a closed choice "this account at Halifax or this account at Nationwide" or whatever.

I am stepping up a bit more now that he is showing me that he is going to "fritter" the money away.

No she couldn't because she can't get a mortgage....

Some of the money is inheritance.

Point him (and maybe worth looking at yourself) the Rebel Finance material on YouTube.

Divide the money into premium bonds & a fixed long term deposit account so he can't easily access it. If he has to give 3 to 6 months for withdrawals then he'll probably decide not to take it out for frivolous things.

He can save the money from his wages to spend on his girlfriend & leave his savinga alone. The inheritance should be used to buy a house for him now before he wastes it away.

Just tell him what to do. He is not making the choice not to move the money. He is not making any decisions because he's scared to because he doesn't know anything about finances. You have accepted responsibility for his money so you should be doing what is in his best interests. You KNOW the money needs to be moved. So tell him that's what's going to happen.

I would encourage him to put £20k into a long term savings account with fixed interest - 2yrs or 5yrs. The interest rates are great at the moment but they will go down if the Interest rate does so best to lock in now. Keep £10k in an easy to get at account. Then transfer £200 every month from his £1200 into that account to build savings up for fun things, £1000 is plenty of spending money each month! The best tip that I ever got was every time I got a payrise, put the extra money into savings - if you don't have it, you don't miss it. I saved up loads before moving out by doing that.

Presumably, his Mum can't hold it for him due to UC. He could hold it himself but doesn't trust himself.

Would he be more likely to take advice if it were perhaps from young men?

I’m loath to recommend Reddit in general, but there is a subreddit called UKPersonalFinance that might give him food for thought. It’s got a big page of advice about what to prioritise money on, but more importantly a load of (mainly youngish, mainly men) discussing finances in a literate and responsible way. I’m not suggesting he make a post - just that reading around for 30 min or so could really open his eyes.

Could you ask him if he wants you to put it into a saving bond you can't access for 2 years? Maybe he'd agree to some of it going into a bond. The interest rates are quite good at the moment.

I would say "you asked me to look after it. If you really decide that you want to spend it, it is yours, but this is exactly the type of situation/spending that you were wanting to avoid. How about we make a plan for you to save the equivalent amount, and then use that to treat your girlfriend".

I know the feeling - I am sick of speaking to my daughter about pensions at this rate there won’t be any state pension when she retires. She sees herself as the hub of her friends social lives.

£1500 on the Gf birthday, he's definitely thinking with his little head and not his big one
He's going to learn the hard way methinks.

Living the life isn’t he at such a young age! Good for him atleast he’s working, so is gf not like she is sponging after him.

I would try and talk to him about why he feels the need to spend so much on his GF and check it's not a self esteem thing

Id be mortified if a BF spent £1500 on me, its a lot of money and he doesn't need to buy affection.

However ultimately I'd mind my own business because he is an adult

You need to speak in plain English and tell him as it is. Pussy footing around is doing him no favours. And after that, if he chooses to blow his money - then that’s up to him, at least he has been clearly warned.

i have save up similar sums for each of my two kids. They both know absolutely not to touch that money and it’s there for them later in life to eg: use as deposit to buy a home.

i tell them that a lot of hard work and sacrifice went in to accumulating that money for them and it’s not to be squandered. That once the money is gone, that’s it, it’s gone and there’s no more where that came from. That it’s very hard to save that amount again when you’re working, paying bills and the cost of general living.

i told them to pretend the don’t have it. But also they have it all in shares. My 20 year old has never touched that money/ shares.

if it were me, I would be absolutely blunt with him and spell the situation out to him. That spending like that would mean before he knew it, he’d be left with nothing but huge regrets but there’d be nothing he could do to savage the situation as the money would be gone.

After spelling it out to him, if he still chooses to squander the money- that’s up to him, he’ll have to live with the consequences but at least he has been clearly warned.

I think he's aware that he might spend the money unwisely and hence put you in as a stop. However that's not working and perhaps it's time for financial education. We all find finances daunting. Perhaps because he's been so well prepared for he struggles with investment? I say get a personal financial advisor to work through options with him. Also perhaps he could think about using that money as a loan? What he takes he pays back? Helping him think about the real cost?

I have spoken to him, and he says he is not going to spend all the £1500, I said then maybe send £1000 back, and he did!

We're sitting down this weekend and looking at higher interest accounts together. 👍👍👍

Tell him and have a chat. He’s obviously sensible enough to give it to you in the first place so would expect he would be open to your views on sensible spending.

having said that, say it without judgement and don’t withhold it - it is his choice.

At least then you have consciously given him guidance and he can concious of chose to ignore it or listen. In ten years time he may be thankful you imparted your wisdom. If you don’t in ten years time he may wish you had.