What to do with a lump sum

[InTheTeapot]

Hi, I'm three years out of a long term relationship at the end of which our house was sold and the equity split between us.
I work part time and get tax credits and CB and have very little spare for anything.
I used some of the equity to furnish my rented house, buy a car and take my children and new partner on holiday last summer.
I am now trying not to nibble any more away and its in an ISA. But is that the best place for it? And I am so tempted to use another chunk to have a proper abroad holiday this year, something my children have never had and until they earn enough themselves, likely will never have again. Our holiday last year was in the uk and it rained all week.
The amount, though not to be sniffed at will do so little for me when/if I retire that I sometimes think it's better to create a lovely time NOW.

Nope. Hold on to it, you just don't know when you might need some money in an emergency - car breakdown or other issue. I definitely wouldn't spend all or almost all of your savings on a holiday ( it sounds like that's what you're suggesting?). Financial security is more important to children than a holiday (they wouldn't say that themselves but the impact of your money worries on them could be significant)

No, no not all of it by any measure. Um, an eighth maybe.

When universal credit comes in you want be able to claim with capital.

Wrath, did you mean I won't be able to claim? I aim to get full time work as my children get older so hopefully I wont be relying on universal credit.

Some ISA's will pay round 4% interest, which is probably about the best you can hope for at the moment. If you are hoping not to be claiming Universal credit then it's probably best to keep it in an ISA. If you will be needing Universal credit, then I'd probably say spend it ! I think really it depends how much the amount is.

please point at these 4% ISAs!!

the best cash rates are on current accounts. ISAs are shocking.

Yup, put it in current accounts. If you have more than a few thousand, make santander 123 your main current account and you can get 3% on up to £20k. After April it won't be taxed either. Look on moneysavingexpert if you need more than that.

I don't see anything wrong with spending some of it on a foreign holiday. They don't necessarily cost more than staying in the UK and paying more for expensive food drink fuel and activities. Food and drink is often cheaper abroad and you can just go to pool or beach in more reliable weather.

Special- sorry I was getting confused with my kids Junior Isa's which are paying 4% currently ( Halifax). I think my dh's halifax ISA is paying around 3%.

My parents were always very sensible with money. Overpaid on the mortgage, decent savings, always talked to us about money and the importance of savings. When I was 15 we were burgled and our TV, video and stereo were stolen. We discussed this a lot as a family and how good it was that my parents had savings as it meant that we could replace everything that weekend rather than having to wait 3 months for the insurance to come through.

And then.......

Just after I started university a random distant aunt died. Left enough money for the estate to be one of those listed in the Times. My parents inherited about 5%. 5% of a hell of a lot is still quite a bit. Paid off their mortgage and doubled their savings. Then 2 months later my dad got a big promotion, 2 years after that (just as the inheritance money was coming through) my mum got a well paid job.

Suddenly they had a hell of a lot of money to play with. More than they could ever imagine. But both their kids were adults by then. So too late for the big family holidays.

The "savings are key, save save save" message suddenly got changed to "life is short - savings are good, debt is bad, but don't obsess about it, holidays are very important".

oh well..

the 3% will be a legacy rate. Best available now is 2.25 for five years.