To give an 18 year old 30k

[WhenSheWasBadSheWasAnOrange]

I have a huge disagreement with dh. We have set up a savings account for dd and plan to save £80-90 pounds a month for her until she is 18 (she is 19 months old now).

I have found a cash isa at a really good interest rate but the money would be in her name, we would not be able to access it until she is eighteen. Once she is eighteen the money would be hers and we would have no control over it.

With interest this money would probably add up to over £30,000. It would be there to help her get through uni, or money for a car or deposit on a house.

Dh thinks I am mad leaving dd this amount of cash when she is eighteen. He thinks there is a huge risk she will blow it on amazing holidays or a very expensive car (or god forbid drugs).

I am being stupid saving this amount of cash for dd?

Dp got a load of money at this age. She bought a car, put herself through Uni and used the rest for a deposit on her first house when she left Uni. Then we used some more for a deposit on our current house. I think not all 18 year olds would blow it, but I certainly would have. I wouldn't risk it tbh. Dp only got hers so early because her dad died and left it to her in a will.

I would say the odds are, that at 18, a lot will go very very quickly, and not on sensible things. As she is still a baby, it's impossible to tell what her character will be like in 17 years time, and she could turn out to be a very sensible level headed teenager who will use it wisely, but I think the stories on here are a warning. I would seek further advice from an IFA, I think your DH is probably right.

Oh, I don't know. I got an inheritance at that age and was immensely sensible with it, partly because I was entirely aware it was going to arrive. I used the yearly interest to top up my student loans, IIRC.

It was actually a real incentive to continue to save, because I had grown up seeing the power of compound interest, and enjoying the idea that I could have interest from savings, spend some, and still have more next year.

I got my inheritance at 18 (circa 10k) blew it in 6 months, now I wish it was only available at 21 or 25! That way it would go to good use instead of on clothes & alcohol!

justabigdisco - I save £81.20 for my son each month (his child benefit) and I've guesstimated he'd get around £16k at 18 if we didn't touch it (at current interest rates). £30k is a very impressive return.

You might want to look at this recent thread OP. Some thoughts there.

I save into my DSs' pensions each month (6 months and 3 years old), and part of my rationale in doing so was not to give them a lump sum at 18. Any money they are given goes into their savings accounts, and we hope to be in a position to help them through uni or with a house purchase at the time (we should be mortgage free by then).

I wouldn't give her access to that amount of money at 18.

Save it in your name, regardless of the potential loss of interest. My two certainly won't be getting their grubby little mits on large amounts of cash at 18. I did know a child who got access to ten million at the age of 12, which is scary IMO. I no longer keep contact so I have no idea how he handled the situation.

It's interesting as we've started saving for DS and have had a similar conversation.

Both DH and I are very boring sensible with money and if we had received 15K (what DS might receive) aged 18 it would have been spent on our studies instead of getting loans.

But we have no guarantee what DS will do.

and he might be like my brother who bust a gut working evening and Saturday jobs since he was 12 to save money for uni then blew it all on drink and partying and is now in debt, something he really regrets

So we haven't decided what to do yet. Although I think we will leave his savings account for putting birthday/Christmas money in and putting aside money in our names for his studies later.

I had £6,000 when I got to 18 and it all went on fags and boozey nights. And the rest went on a cat that I rescued at 4 weeks old

There can be tax difficulties with trusts that mature post 18 though I believe. When I wrote my will I wanted to keep my estate in trust for my son until he was 21 and the solicitor advised not to do this and to leave it in trust until 18 years old. Might be worth posting in Money Matters or Legal to get a view on trust funds?

Actually, thinking back to my friends at 18, I think only 1 or 2 of about 30 of them would have wasted that sort of money, even then, I think they would have bought a 'thing' like a car, which at least would still have some value. But then it's basically £10k a year for uni if she goes - that's just going to reduce what she borrows, not mean she's completely debt free. (They are talking about £50k debts by the time the ones who are babies now go to uni, you will probably have just saved enough for course fees, not money to live off, yes, we are talking US levels of parental savings required).

Because it's such a big sum, it's not like handing over £2k that might get spent, that's a sum to be accessed for a reason, not to just transfer to current account for day to day spending.

If you are nervous, put it in an account in your name, but mentally make it 'DDs money' - are you 100% certain you're never going to be tempted to dip into it? Not being able to is always good.

My step sister's kid got a similar amount of money at 18 as damages from a nasty car crash he had been in as a child. He bought a boy racer. The insurance alone was over 3 grand. Within six weeks he couldnt afford to put petrol in it! He spent the lot on the car, and he also picked up a poker habit! So, yes, you would be mad to do this, most eighteen year olds have no idea about how hard money can be to come by.

It will depend on her character, which of course you don't know now.
I have a 6yo who, if you give her 5 sweets, eats two and saves the rest for later. WTF is that all about ?? She would probably be good with £30K. DS I imagine would be appalling.

I wouldn't risk it if I were you. Get an appointment with a financial advisor and see how you can get round this.

My mate blew a similar amount on nights out and clothes at 18 when she got it. YABU

if you put a small proportion of that monthly amount into a pension, it would mean a massive boost to her ultimate pension pot because the earlier you start, even with small amounts, the better the return in the long run. Although the tax efficiency isn't going to help yet as presumably she isn't going to be earning enough to pay tax any time soon, it's a way of giving her some comfort later in life when she can p*ss it away on cruises and frivolous things like heating bills. Keep the bulk of it for when it may be more useful for things like house deposit though, and best way to do that is not to let her know about it until she turns out to be sensible enough to manage it which may be at 18 or it may be at 28.

"This was done by my oldest son's father. My oldest son is still, at 27 very angry with his father. We begged and pleaded for it to be 25, but exh insisted 18. Obviously 18 year old blew the lot, in a year and a half. 40 grand, gone. As ds says, had it been 25, had his father listened he would now own a house."

I think your eldest DS might need a quick lesson in personal responsibility. He could have bought a house at 18, it was his choice not to.

I'm following this thread with a lot of interest as I am kind of in the same situation - well not quite 30k though.
We're saving for DD (11 months old) but at the moment it's in a savings account under my name. But the interest earned is almost nothing and we could be doing better with an Isa under her name. However, we're worried that she may not use that money wisely if it was made available to her at 18.
So, I'll be looking at all the suggestions offered in this thread.

Me and my sisters each inherited £800 from our GM when we turned 18. One of my sisters bought a car, I bought my wedding dress, dh's wedding ring and my wedding ring, other sister still has hers I think. I wouldn't trust an 18 year old with 30k though. I wouldn't trust myself with 30k and I'm 30!

What will 30k be the equivalent of in 16 years though? Probably about 10k now?

Spookily timely post OP :)

I'm in the middle of exchanging emails with DD (28) who's hoping to buy her first flat soon.

We've had money put aside to help each DC with a property deposit for ages, but until a couple of years ago DD spent, partied, drank, partied some more. Eventually realised that living in a tip with 5 others was no longer fun and has been saving for a while and focusing on being a sensible adult. It took a while!

No way would she have been getting our cash any sooner but now is the right time and should come as a lovely surprise for her later today :)

Give £30K to an 18 year old?

CRAZY!

My sister inherted 60k plus a flat and and a car when she was 20 she should have been set for life she spunked all the money on hoildays (0ne year she had five hoilidays including taking 8 friends to disney land, and treats for mates (who are no longer her mates) sold the fista and brought a brand new rangeover (25k)

Some sumbag she was with convined her to put his name on the deeds (dont get me started)

Long and short she is currently living in a council home with two kids she can barley afford to feed and the RANGE she had to see for half the price because she couldnt afford the petrol or tax now she has no money

Dawndonna your son needs to get a grip. Has he ever heard of personal responsibility. Dear God I feel sorry for his Dad

Have you thought of opening her a pension instead? My MIL has done this for dd, it'll mature when she's 55 and even if it only has £10 a month paid in it'll pay out well. This will potentially allow her to work freelance take career risks if she wants or have an extra comfortable retirement or retire early (something I won't be able to do). I think its a fantastic idea.

Will just try to dig out a link...