1k for adult children who want guidance

[Greatly]

Kids have been gifted 1k each. They are in their early 20s and at university. Dh says just give it to them and let them spend but both have asked me if it's worth saving and if so what's best. Money currently in my account. I was thinking of saying spend half and save half. Thanks.

Of course it's worth saving .. do they need anything specific for Uni ... a lap top or similar? No point just spending it on beers and nights out.

Yes I agree. Just looking for thr best idea for saving it.

Lifetime isa? I have one and its surprising how quickly it grows with interest and the government contribution (25%). They can contribute themselves after uni and it can be used to buy property or for retirement but can't be wasted.

Do you mean the best saving account for them to get? Tell them to have a look on money saving expert at the different types of accounts they can get e.g. do they want easy access but lower interest, locked away and more interest etc

www.moneyboxapp.com/isa/lifetime/cash/gs?utm_source=GoogleSearch&utm_medium=GoogleSearch&utm_campaign=LISA&gclid=Cj0KCQiA0oagBhDHARIsAI-BbgfU6Xn-a6L8NXxEZ86C_YUM5LXRYzuLC6Ph4Uyi8In65iAJ6MO9JhUaAnFkEALw_wcB

Depends on their circumstances.

Do they have other savings?

If they can't already, it would go a long way towards driving lessons.

Or like a PP says, other larger purchases like a laptop.

If they aim to buy a house, towards the deposit. If this is a realistic aim, it could be in a LISA for the government bonus. Otherwise in the highest interest paying account unless they won't need the money for at least five years when it could go in a S&S ISA.

Perhaps let them have a proportion up to about a quarter to spend, but it depends how they are with money.

Are they likely to buy something worthwhile like a much needed new phone, so they can save money with SIM only or are they likely to blow it on takeaways or other ways to spend a lot of money on not very much?

If they put it into a Lifetime ISA it becomes £1250. But it is then locked away (it can be taken out but loses more than the bonus) until used to buy first home (there are conditions).

£1000 paid into their pension becomes £1250 and is invested for a very long time... possibly 40+ years.

£1000 paid into a bank account is likely to be spent on day to day living.

£1000 paid into a savings account may get £30 of interest if left for a year.

I would look at their overall financial situation and work though the Ramsey Baby Steps or the UK Personal Finance Flowchart ukpersonal.finance/flowchart/
Those will typically mean:
Emergency fund
Pay off debts
Increase emergency fund
Save towards home deposit
Invest in workplace pension
Invest in ISA

Well of course it is worth saving! But if they are adults they should be in control of it.

Let them do the leg work, point them to money saving expert and tell them to let you know where to transfer the money.

The question for them is whether they are saving for something specific or just for a rainy day and whether they want easy access or not.

They may want to save some and spend some on something they need/want now which is also ok.

Thanks super advice.

Send them to money saving expert and let them do a bit of research there. At that age and at uni they should be capable of deciding for themselves.

They have asked me. Odd that you'd assume talking to a parent is somehow inferior to being sent to a website. Nothing wrong with using MSE but no need to be slightly judgy about it.

Some banks eg Yorkshire are offering some rate accounts if you can leave the money for a couple of years (not an ISA). It's very tempting if they can afford to leave it.

High rate....

Personally if they are not used to investing I would encourage them to put at least 100 into an stock isa. Then it's there open.

100 to enjoy... Spend.

Save the rest.

Can they drive? Spending it on driving lessons might be of more long term value than putting it in a savings account.

If they were a bit older and working I’d say put it in a stocks and shares LiSA and start saving for a deposit. At their stage though I think it might be more helpful to have access to the cash and keep it accessible. Even if they are one of the lucky ones there can be quite a lot of cost associated with starting a job. I think I finished in the July and had a grad scheme to go straight to in September but I had maxed out my overdraft and had to borrow money from my parents for a work wardrobe. Lots of first time grads end up in London needing a deposit for a flat share, travel card etc. I’d be reluctant to lock money away in a Lisa or invest unless they were in a comfortable financial position otherwise. If they look on MSE they will be able to find the best savings rate for easy access savings.

I'd encourage them to spend it on something life-changing.

Driving lessons or a plane ticket to SE Asia for a couple of months are both ideas which spring to mind.

They'll get a better return on either of those investments, than putting it away in a bank account. Unless doing so sparks a lifelong interest in financial planning of course.