Gift of £3000 to DS

[Topaz67]

DS is coming up 18. My DM has been saving for him since he was born and now has £3000 in his account. He doesn’t know about it. He will probably go to Uni next year. He doesn’t have a job but he has saved all his birthday, pocket money etc for the last year. My DM wants advice on whether she should give him the entire amount in one go. His CTF is £900 as we didn’t add to it. He’s got a savings account which I assume will have to be transferred to him at 18.

I would try to encourage him to put it all including the CTF money in to an ISA or LISA.

ISA - it is accessible, there are Cash versions and Stocks & Shares versions, the latter is useful for money not intended to be used for at least 5 years.

LISA - it gets a Government topup. Max £4k can be put in per year. It can be used towards deposit for a first property, or left for retirement. It is not as accessible as the ISA but can be accessed for other reasons with a penalty payment. Cash and S&S versions, the latter useful for long term.

I would split it. £1k now and £2k when he reaches 21.

I guess it depends how sensible he is. I have 3 Ds's and when they turned 18 they all received about 5k which their grandparents ( now deceased ) saved and we then added to. Ds1 blew the whole lot in his first couple of terms at Uni - socialising/ weekends away with his girlfriend / gambling etc. We were mortified.
Ds2 is the opposite and hasn't spent a penny of it in the last 2 years and has added to it and saving for his future.
Ds3 received his about six months ago, has spent some but it remains to be seen how long his lasts !!
I think for some young people, receiving a lump sum at 18 isn't great and as pp says, if you ahve control over it then split it. We had no control over it as the junior ISA's became adult ISA's and had to go straight to them at 18.

I would get it put straight away into a LISA.

I would only give at 18 if being used for Uni fees, supplies. Otherwise 21 is sensible once they have their degree in hand and perhaps want to begin saving for something worthwhile like a house.

What kind of young man is he? Is he the sort who'd spend it frivolously? I hate the thought of money that's been hard-saved being spent on nothing much.

Has he had driving lessons?

Thanks everyone. I think the first step is to speak to DM and see what sort of account it’s in. If it’s going to automatically transfer to him then we need to have some good suggestions, which you have kindly provided. If not then I like the idea of splitting it. He started driving lessons last year but not really interested and struggles with doing more than one thing at a time, so I think we’ve got to wait until he finishes his A level assessments. He’s saved quite a bit and doesn’t waste money. I don’t want the cash to be excuse for not getting a job though, especially as he’s looking to defer his Uni place.

When we were 18 my then boyfriend was given an unexpected 5 grand from his grandad. We absolutely ripped through it in less than a year - he treated me a lot as well as other friends, paid for holidays etc. Once it was all gone he started trying to ask for money back off me and the rest of our friendship group and it caused major issues. His parents were mortified. We then had a baby 2 years later and were absolutely skint, and regretted so much wasting that money. Hopefully your DS is much less of an idiot as my ex but all 18yos are idiots to an extent so I would be very cautious

I have dc aged 24, 22, and 19.
I personally would see if your Mum would be willing to let him have it when he was 21.
Honestly, when they first go to University there is quite a change in life in terms of learning how to budget. They suddenly have their own budget to manage and have to learn to balance social life with eating, and then things like hair cuts or travel or boring things like replacing socks and pants, or toothpaste etc etc.
I'd let him go through that as one step, and then drop gentle hints about asking you if he is thinking of making any big financial decisions before he turns down things from lack of money.
I think it makes a big difference after you have been living independently and living within a budget for a few years, as to what you might choose to spend that sort of money on.
It might be, as he matures, he wants to travel or at some point he'll want to buy a car (well, it's the insurance that costs). etcetc

Of course, every dc is different, but that's my advice.

In fact, one of my dc did have a £3K policy thing mature, and she asked me to keep it until she needed it as she didn't want to have it sitting there in an account, tempting her