Borrowing child’s savings...

[Quckname]

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

@dilmor

I would say YABU only because this happened to me. Parents and other family family members used to pay into mine and my bro's savings accounts. My mum got into debt when her and my dad got divorced. My mum used our savings. We never got repaid. I only found out because I asked why we had savings accounts with no money in them and she confessed. I don't resent her at all I am on great terms with my mum, however, it would've been nice to see some money when I left school/ started working etc. Maybe I would've taken my driving test sooner or even moved out sooner because I would've been a bit better off financially. No hate just thoughts of what if though...

But presumably at the time, it was a choice between your family unit's standard of living going down the pan during that period or using that money? If you lived with your mum. There might have been far greater impact on you by not having clothes/food/heating whatever growing up than you lost by not getting driving lessons etc later on.

Although using your family members' contributions as well is not OK.

No

OP pay off the debt using the savings, re-evaluate your spending habits for bills, clothes, food, subscriptions etc. Now you can focus on building up your own personal savings for emergencies and another savings account for your child. Might be also a good time to check your pension.
It doesn't matter if you can't get to the original amount in savings for your child, it is lovely gesture but not essential.
The day to day quality of life is
more important for everyone in the family.

@MillicentBystander101

Well, unless your child has less than £3000 or their money is in a junior ISA, their savings affect universal credit entitlement, and you are expected to use their savings. If that isn't stealing, neither is this, OP. At least you'll be paying it back.

I was going to comment the same thing. Although I admit I thought it was all just included as part of the capital assessment. But I purposely set up a JISA for my son for this reason so it wouldn’t be included, so don’t remember the details. But yes, DWP will expect parents to use any children’s savings if total capital is over a certain amount. I guess DWP aren’t known for their morals but they certainly know the law and it’s not theft. They wouldn’t even care if some of that savings had come from others as gifts to the child!

OP I think it’s absolutely fine to use the child’s savings as it was your own money. You had the best intentions trying to save for their future but made a mistake and over committed. In theory your child shouldn’t have savings this high in the first place. I would advise caution of putting too much pressure on yourself to replace/catch up what you’ve taken in a certain time period. By all means pay into the savings again IF it’s affordable for you, but don’t over commit otherwise you could end up in a similar situation, maybe not with debt but needing emergency funds for example.

I would actually consider prioritising a buffer for yourself first (or put smaller amounts towards both). I’m sure we would all love to save large amounts for our children but financial security in the present day is more important for them I think. So don’t make replacing the savings your financial priority unless you have enough to do so.

Lots of projecting and tales on this thread about how parents stole money from accounts that other relatives have paid into. That's not the case here, it isn't money that aunts, grans, uncles or grandads have paid into; but an account the person who wants to use it to improve the situation in the here and now set up to try and do the right thing even though financially it wasn't Ideal. It sounds like her child would be fine with it anyway.

That's a big assumption, @GreyhoundG1rl. How the hell would you know? Try imagining for a minute that the op is telling the truth, that she will be debt free and able to repay her dc, instead of adding your own judgement and assumptions.

It's people like you that made me feel inadequate, useless and unable to to try for fear of failing for most of my life. People get into debt for loads of reason and they also change and mature.

@MillicentBystander101

That's a big assumption, *@GreyhoundG1rl*. How the hell would you know? Try imagining for a minute that the op is telling the truth, that she will be debt free and able to repay her dc, instead of adding your own judgement and assumptions.

It's people like you that made me feel inadequate, useless and unable to to try for fear of failing for most of my life. People get into debt for loads of reason and they also change and mature.

I don't know. Reading the op, though, there's a hell of a long history of financial mismanagement. It's not just a blip due to unexpected life events. It'd be more realistic to accept repayment may not be possible.

It's people like you that made me feel inadequate, useless and unable to to try for fear of failing for most of my life.
Oh, and ^ that is a pile of utter horseshit. If you feel inadequate, it wasn't "people like me" that made you so.

Ultimately your child is going to suffer more if your credit rating goes down the pan and you can't pay your essential bills.
For what that money will actually buy in the future, better to use it now.
But the parent needs to address what led to this situation. If it's covid, then it seems totally reasonable. if it's an online shopping habit, less so

We used all our child's savings (put there by us and by family, about 50/50) to pay to finish some house renovations so we could move. When we moved we paid it back. I've since moved all that same money into an ISA, so it's properly protected.

I wouldn’t, I’d pay the higher interest. I only borrow in the very short term eg window cleaner comes unexpectedly, borrow cash from their money box and immediately transfer the same amount to their savings account.

How can this be considered stealing?

With the best of intentions the parent has put money aside as savings but now needs it for family expenses (albeit because of poor financial decisions so I would suggest parent seeks financial advice ASAP).

The money doesn't actually belong to the child, it wasn't a gift from someone else, it was the parent's money.

Most children do not have their parents set an amount aside for savings.

We did start a savings account for our kids but then realised financially it made more sense to have spare money paid into our mortgage, of course there's no guarantee that our financial position will always allow us to set aside extra savings in the future for them but that doesn't mean we will make a poor financial decision now.

Absolutely right that over the years there have been some financial mistakes, including the desire to keep putting money into child’s savings while having debts elsewhere.
It's easy for people to say this shouldn't be done but as a family that hasn't had the ability to really save, and with a son that will start college in 4 years, I wish over the years we'd just done it and lowered repayments etc. Not everyone's monthly pots to work from are the same, some people will never be fully 'caught up'

have you tried stepchange?

it is a slippery slope to borrow from your child

Having taken the time to read all the ops posts I think the best option is to use the money SHE has put aside, which was supposed to be for her dd but now needs to be used elsewhere. Op has explained her debt and will be able to continue to save the regular amount for dd plus what she'd have been paying off on the credit card. So the fund will build up again. It would be crazy to continue to pay high interest rates on a credit card when there is money available that op has already saved.

you have to make these sorts of decisions yourself op.

I think it would be different if the money had been gifted by other family members for the dc.

This hasn't. Its just money saved by the parents with an intended purpose but has now been repurposed as its needed more elsewhere.

Attitude towards spending has matured significantly over recent years and expenditure is now managed carefully within income, and no new debt has been added to the pot for quite some time, hence why I am confident that the situation shouldn’t re-occur.

This is part of one of op's comments @GreyhoundG1rl so maybe take that at face value, and advise based on that? Your comments remind me of what people would say to me if I mentioned wanting to do a course or something. 'You won't stick to it, you never do' or a laugh and raised eyebrows, and many other unnecessary comments. Funnily enough, there was a reason for it - undiagnosed adhd.

I just don't understand why you've gone out of your way specifically to make someone feel shit and doubt themselves. You're not the only one on this thread, though, to be fair.

No, i would never take the childrens savings. I’d take a second job etc first if needed.

I wouldn’t.
Well I did actually and I feel bloody terrible
It was child maintenance so technically “ mine” but it was a lot and some of it should have been saved properly.
I paid off debt but since reacquired it. We had holidays and big Christmas’s but really I should have been more disciplined.
I feel so sad that DC has a tenth of the savings he should have. It’s awful.

Another way of looking at it is if you pay high interest, you'll presumably have to stop paying into the savings account (as well as cutting elsewhere).
Sounds like you have about 8 years by time this would be accessed. So even if you used it but then carried on as you are (rather than paying back as such) the amount would be about the same.
Everyone loses out if you take on expensive borrowing

All the posters saying that it's the OP's money are wrong, as soon as it was gifted into the child's account it legally belongs to the child.
Anyone under the age of 18 can't be legally liable to enter a contract to lend the money back to their parent.
What the OP is suggesting is tax evasion, as the money in the savings account will have attracted no tax on the interest due to it belonging to a minor.

@MillicentBystander101

Attitude towards spending has matured significantly over recent years and expenditure is now managed carefully within income, and no new debt has been added to the pot for quite some time, hence why I am confident that the situation shouldn’t re-occur.

This is part of one of op's comments @GreyhoundG1rl so maybe take that at face value, and advise based on that? Your comments remind me of what people would say to me if I mentioned wanting to do a course or something. 'You won't stick to it, you never do' or a laugh and raised eyebrows, and many other unnecessary comments. Funnily enough, there was a reason for it - undiagnosed adhd.

I just don't understand why you've gone out of your way specifically to make someone feel shit and doubt themselves. You're not the only one on this thread, though, to be fair.

You're dragging a whole load of your own unrelated issues on here, and telling me I'm contributing to your feelings of inadequacy. That's actually very odd, please stop it. Go and bother some of the other posters who think it's a bad idea, maybe? Or maybe just accept that people can have whatever opinion they choose and it's nothing to do with you. Quite literally; nothing to do with your various personal issues.