I said before, that financial planning needs to be a dynamic thing….changing as financial circumstances alter. It is a mistake to make a rigid plan and then regardless if changes in circumstances, to insist on rigidly sticking to it because ‘that’s what we said we’d do’.
All kinds of things can happen which mean a financial plan might need adjusting. You can find yourself better off due to promotion, inheritance, something else which happens. These could lead to to reappraisal of age of retirement, whether someone reduces their houses at work, moves house or all kinds of things. Likewise, you can lose a job, find an investment or risk taken didn’t pay off, get divorced, have a spouse die….all kinds of things and these might mean you work longer or more hours or downsize..or whatever.
Kids are rarely financially independent until at least their mid 20s these days, so a change in financial circumstances often affects the whole family. A windfall might fall on one individual, but given parents support children and you g adults when there’s no-one else to, a windfall on any individual can affect others. If a parent in OP’s scenario inherited some cash, there could be indirect benefits for the kids, in terms of a later gifted house deposit. When a child inherits, it means some of the financial burden now or in future is relieved a bit for parents. This isn’t parents ‘stealing’ their kids inheritance or not supporting them or failing in their parental duty, quite simply that a child with an inheritance might not NEED the level of financial support a child without it does.
It’s foolish to say that all parents should be financing Uni, or donating house deposits, or supplying free childcare later in life because that’s their duty as parents. It seems daft to suggest that a kid who somehow has another source of money should be able to just sit on that and the parents be expected to fund all the above things, because that’s the parents’ job. Given we are talking about young adults here, starting to take some financial responsibility is part of growing up and teaching them that, rather than molly coddling them and treating home financially like children until their 30s isn’t doing anyone any favours.
I totally understand how lots of people see this inheritance as perfect for a house deposit. And it is. What a wonderful gift. And I understand how OPs DH and indeed herself would love that to happen and hate to see the cash wasted by late teens/young adults. Without a doubt, conversations need to happen and these lucky teens will need some guidance and help.
In this scenario and Ops situation, I would expect this to impact the kids and also the adults of the family. I’d be wanting to show the kids they were lucky and now had opportunities they might not otherwise have, but also to help them to think through their finances and understand hard work and financial responsibility would be needed, as too easily, a windfall like this can be wasted.
Personally, I’d still be encouraging the students to be taking holiday time jobs. I’d be encouraging them to look at the impact of student loans on future payments and to be thinking about keeping the majority of the money for a house deposit. I’d also be looking at conversations about a reduced parental contribution in the circumstances, and a proper explanation of how OP feels about work and her pressing need to reduce hours or step back a bit. I would t be looking at going to zero parental contribution of the perhaps £5k top up needed per year, but perhaps to £2k. Because if the student hasn’t been working in the holidays, then a key question is why not? To me, this seems to be a key issue within all this - you g adults taking on some financial responsibility, which makes the. Value money and their course so much more. Everything being on a plate and gifted isn’t a good building block for future finances….and even more important now with this big gift.
What’s the inheritance to be used for? Well, it might well bethat final decisions aren’t made for a while. Instead, it could be that most if it is invested wisely, with a view to it being available in 5-10 years time. At that point, depending on the career trajectory of the kids and their earning potential, it might make sense to use some of the money to pay off loans (high earners can avoid pretty high interest rates by doing this) or it might make sense to just leave the loans as they are (low earners might never pay much back at all) but regardless they would probably want to keep most for a deposit. But it would have to be their choice at a point where more info was available. Until you know your career, where you’ll be living, what you’ll be earning, if you’re single or not….much of it is academic.
And if OP had previously considered helping out with a deposit, well now no need, or much less needed. Some people would no doubt say that waoukd be selfish if OP, or OP not DC benefitting from the inheritance. Of course not. Parents are not cash cows for their kids’ lifetimes, regardless of their kids’ own financial circumstances. Some kids need more help, and others don’t. Responding to the circumstances as they arise and seeing finances as a dynamic ongoing and changing thing is key.
And sounds to me like lots of people need to be helping their kids towards financial independence much more, rather than babying them or expecting g them to always need parental help. Teaching them about bank account to, credit cards, interest rates. Helping them to take on some appropriate part time work in sixth form, and Uni holiday terms…it’s not just about money, but the skills and self discipline gained from doing any paid work which forces you to commit. Teaching them about earnings and savings and bills and budgeting. Making sure they understand student loans and the interest on them. He,ping them understand renting and saving for house deposits and about different career paths and earnings structures etc.
I’d say someone who learns this stuff as a teen and young adult, might find themselves better off financially by 40, than someone given £100k at 21, but who had never been expected to work or contribute themselves as a student, and whose parents had always taken full financial responsibility and decision maki g for.