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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Borrowing child’s savings...

470 replies

Quckname · 12/09/2021 12:02

Do you think the following is acceptable?

Parent has some expensive debt on credit cards. The interest free period is expiring and the parent is not able to get a loan or balance transfer to a lower rate.

Child has an instant access savings account with some money in.

Is it ok for the parent to borrow funds from the child to repay the expensive debt, as long as they ensure that the savings are repaid (with interest) before the child would have used the account?

So as not to drip feed:

  • money in the savings account was paid in by the same parent (not friends & family)
  • money would be repaid along with the compound interest that it would have accrued in savings
  • repaying to the child’s savings would take approx 3 - 4 years, compared to it taking 20 years plus to repay on the credit cards with high interest
  • child is still young so not due to receive the savings for a long time
  • the child has not been asked for their opinion because they are too young (and too generous) to make an informed decision
  • parent has explored and exhausted all other options to reduce the cost of borrowing
  • if paid off, the credit accounts will be shut down so that it is not possible to accrue large debt again

What do you think?

YABU - borrowing the money is the same as stealing, the parent shouldn’t touch the child’s savings and should repay their debt over the longer period of time at the high interest rate.

YANBU - the money will be repaid to the child’s savings, and the child will benefit from having a parent that is not stuck in long term expensive debt

OP posts:
Fraine · 14/09/2021 00:09

@Ann30567

My mum ‘borrowed’ my money from my after school jobs and paper round from when I was 14. She even started a book with how much she was borrowing. I never got any of it back. And she was still asking for money in my 30’s until I finally cut her off completely. It left me resentful but I suppose the good thing that came from seeing how feckless my parents were was that I never borrow money (apart from my mortgage) and I save when I can. I’m just dreading them going into a home and expecting me to pay again. So no. Parents should never borrow off a child as they will get used to it.
Definitely don’t pay. Not your responsibility.
pompomsgalore · 14/09/2021 05:53

@Ann30567

My mum ‘borrowed’ my money from my after school jobs and paper round from when I was 14. She even started a book with how much she was borrowing. I never got any of it back. And she was still asking for money in my 30’s until I finally cut her off completely. It left me resentful but I suppose the good thing that came from seeing how feckless my parents were was that I never borrow money (apart from my mortgage) and I save when I can. I’m just dreading them going into a home and expecting me to pay again. So no. Parents should never borrow off a child as they will get used to it.
Your sad situation is nothing like the OP's situation.
savannahnights · 14/09/2021 06:09

@BlackShadowCat

but never anything that my mother could take from me and misuse.

But, I'm guessing your mum used the money to clothe, feed you and put a roof over your head. It sounds like she was on hard times.

She had no business using that money though even if she was on hard times since it never belonged to her nor was it child support. Based on her pretending to put the money away for her child and then telling them when asked for it, that any money that came into the house was her's to spend as she wanted, she sounds like she was a thief.

Taking your child's money that you gave them like the OP's situation is understandable (as long as it's paid back since it technically became the child's money once it was put in their savings account) but taking money that was given to them by someone else is completely unacceptable and straight up theft.

ManifestDestinee · 14/09/2021 09:19

My mum ‘borrowed’ my money from my after school jobs and paper round from when I was 14. She even started a book with how much she was borrowing. I never got any of it back

Not the same. She took your own earned money. The OP put the money in the account in the first place, its actually her money.

Enough4me · 14/09/2021 09:31

This is why I don't save separately for my 2DC. I would see it as pots I would hope to pass on in full when they are older, but before doing so would need access in emergencies and it's not worth the aggravation.

I have friends who have saved for DCs who end up apologising for DCs for having to borrow from them, but the DCs have not worked for it.

Instead I overpay my mortgage with the intention that I will have additional free income when they are late teens if they need driving lessons etc. , but I will expect more help at home for that. Free money is too easily spent by teens who don't see the work behind it.

girlmom21 · 14/09/2021 09:44

@Boomer84

I don’t understand why people are saying you ABU?? I do exactly this, sometimes every month! Some parents don’t even bother setting up a child savings account. We have and if it makes you a bit short occasionally then do not feel guilty about using some. Times are hard and I’m sure if your child isn’t spoiled or entitled then I’m sure they’ll understand when they’re older.
If you're doing it every month why not just put less into the savings so they're affordable?
jwpetal · 14/09/2021 10:55

My father had to do this. It bothered my mother but never bothered me or my sisters. We looked at it as a family issue. He was amazing with money but had a inexpected tax issue. We never wanted for anything and he has given us more than any savings account. Make a decision that is best for your long term family life. All the basic needs then savings. If you teach your ds good financial habits she will see the sense in all of it.

Medievalist · 14/09/2021 11:41

I remember we did this to pay for a new car. We set up a standing order to repay the amount borrowed to dc's savings account, plus an extra amount to (more than) reflect the amount of interest we would have paid on a commercial loan. So dc benefitted and we did too.

Sydendad · 14/09/2021 14:49

Its a very slippery slope. If you are honest with yourself then you know the likelihood of you getting into more debt and never being able to pay it back is huge.
If you are being chased by collectors though I would go for it but only after I contacted a debt management provider. As there are ways with legal support . I am not sure you have really exhausted all avenues.

Fluffypastelslippers · 14/09/2021 14:51

It makes no sense. To borrow from someone and pay back, plus interest, to avoid paying interest on cards Confused

CockSpadget · 14/09/2021 15:02

@Fluffypastelslippers

It makes no sense. To borrow from someone and pay back, plus interest, to avoid paying interest on cards Confused
Of course it makes sense. Pay 20+% APR on credit cards/loan or pay 1%APR back on the savings, the difference is many thousands of pounds. I know which one I'd choose.
islandbeach · 14/09/2021 15:21

@Fluffypastelslippers

It makes no sense. To borrow from someone and pay back, plus interest, to avoid paying interest on cards Confused
What actually doesn’t make sense is borrowing from a bank/CC with interest when there is cash in the bank that OP can access to pay it all off. It’s ridiculous people are even suggesting otherwise. Even if she does pay back into her son’s savings with interest, surely it’s better he has it than the banks anyway!
Fluffypastelslippers · 14/09/2021 15:28

Of course it makes sense. Pay 20+% APR on credit cards/loan or pay 1%APR back on the savings, the difference is many thousands of pounds. I know which one I'd choose.

The interest difference isn't 'many thousands of pounds'

Sure, it will be significantly more but it won't be thousands

Fraine · 14/09/2021 15:30

@Fluffypastelslippers so if it would be ‘significantly more’ then it makes sense doesn’t it? It’s common sense.

CockSpadget · 14/09/2021 15:33

@Fluffypastelslippers

Of course it makes sense. Pay 20+% APR on credit cards/loan or pay 1%APR back on the savings, the difference is many thousands of pounds. I know which one I'd choose.

The interest difference isn't 'many thousands of pounds'

Sure, it will be significantly more but it won't be thousands

If the OP owes thousands, and as they said it will take 20 years to pay back if interest is added, that definitely means thousands in interest.
CockSpadget · 14/09/2021 15:34

[quote Fraine]@Fluffypastelslippers so if it would be ‘significantly more’ then it makes sense doesn’t it? It’s common sense.[/quote]
Exactly.

Fluffypastelslippers · 14/09/2021 15:35

[quote Fraine]@Fluffypastelslippers so if it would be ‘significantly more’ then it makes sense doesn’t it? It’s common sense.[/quote]

Makes sense would be not to have so much debt on cards that at the end of the introductory period you need to borrow to pay it back.

Fraine · 14/09/2021 15:36

@Fluffypastelslippers you’re avoiding the issue now. 😂

Bethany7 · 14/09/2021 15:41

It makes financial sense to use your child's savings. The end result is your debt will be paid off much much quicker and at a much lower rate. You will then pay back your child's money which will be there for them to access when the time comes. By that stage they will have parents who are out of debt which surely is better for the whole family including the child.
This makes sense. You love your child. Of course you will pay it back. This is the most sensible option imo.
All the best

CockSpadget · 14/09/2021 15:41

@Fluffypastelslippers but the post isn't about how the OP got into debt, or to be judgemental about it. It's about the most sensible and economical way to repay that debt. Which would be to not pay thousands extra in high interest, when there is an option to pay minimal interest.

ThreeLocusts · 14/09/2021 15:47

I think it's absolutely justified to borrow the child's money in order to avoid paying extortionate interest on credit card debt. After all, paying that extra money means less funds to spend on the child in the future.

That said, I also imagine that if I were the parent having to do this I'd feel a bit shit about it. But needs must.

LittleMysSister · 14/09/2021 16:00

I would definitely do this. Presumably the child is impacted more negatively by their parent being in long-term debt than they would be by this, especially if they are not due the money for many years anyway.

It's madness to have money sitting in an account while repaying expensive debt, particularly when you are the person that paid the money in in the first place.

If someone else had given the money then that would potentially be different, but since it's your money that you have put aside for your child, I would definitely use it and repay.

Fluffypastelslippers · 14/09/2021 17:08

[quote CockSpadget]@Fluffypastelslippers but the post isn't about how the OP got into debt, or to be judgemental about it. It's about the most sensible and economical way to repay that debt. Which would be to not pay thousands extra in high interest, when there is an option to pay minimal interest. [/quote]
Where are we getting 'thousands' in interest from?

MRex · 14/09/2021 17:11

@Fluffypastalslippers - OP suggested that the only possible interest rate was 80% and for some reason @CockSpadget believes this.

moynomore · 14/09/2021 17:16

Of course the parent should use the money. The parent shouldn't have started the saving unless they could afford it. The child will benefit far more from having its parent out from under crippling debt that not having that money (in case it doesn't get paid back). People comparing it to gifts from grandparents or money earned by the child are being silly - not even close to the same.