18yo big lump sum – how to handle?

[stealersmealdeal]

My DS turns 18 soon and we have about 5 grand to give him that we've been saving since he was little. He's vaguely aware there is several thousand on the way, but not the exact amount.

I just wondered what others have done to approach this, in terms of making sure he doesn't fritter it away? Have you put conditions on how your DC spend something like this, or just let them loose and hope they were sensible with it? Have you made suggestions they have taken you up on – eg partly investing some of it – or have they ignored advice and bought themselves a fast car?! 😱He's working hard at the moment, and will go to uni in autumn, but live at home, so no accomm costs, at least.

Any genius tips gratefully received.

Put a thousand pounds in an ISA each year where the government give you 25% on top so in 5 years he'll have £6250 (I'm not good at maths but I think that's right) and it could go towards a deposit for renting or buying.

At 18 he should understand how hard life is going to be in terms of living each day and saving and this sum could make a huge difference.

My parents gave me and my siblings £25k when we were early 20s (ostensibly for a house deposit). I used mine for a house, one sibling used it for the bar exams and qualified as a barrister and now has a very successful career. My other sibling has spent 90% over the years travelling. Our parents were clear when we were given the money there would be no more until they passed away and if we spent it and regretted it it would be our responsibility.

Our DD is pretty frugal, and has very inexpensive hobbies; she's managing fine at uni. She'll come out of first year with more cash in her account than when she went in, living on the recommended loan amount.

I've been on a few other "university finances" threads where posters divide into two groups; those who can't believe how much money some kids burn through, and those who can't believe that anyone can have a good time without spending £££. I'm sure that most people are actually somewhere in between! But there are a lot of sensible kids out there.

What if you have him €500 or a grand, say, but let him know he could have the rest to go towards smart decisions, and the two of you sit down together to review what a smart decision is, for instance, if he put it into a 4% earning fixed term ISA he would grow the money. He would be learning good lessons with this kind of task.

I don't know why you just don't tell him that if he wants to make a big purchase come to you to discuss and decide together if its a good use of the money. He's 18 - his brain won't finish developing his decision making processes until his 25. In the meantime you are his guide and mentor...sorry but seems worrying to save this money for all this time and then give it to an 18 year old and cross your fingers they make the right decision...

My ds1 (20) had a CTF worth about £7k, as my mum put £25pm in it. As a CTF is was in his name and he had access at 18. He also had a couple of grand in his own name from working, pocket money, birthday & Christmas money.
I used to give them £1 cash per their age in their birthday card (as well as a present) - exciting for a 5yo, not so much at 16! I gave him £1,800 for his 18th as a one off and since then just normal Christmas & birthday presents
He invested, mostly in relatively safe shares but some in Gamestop and made a very lucky gain.
Hes also has £15k from my parents and £5k from an inheritance in the last yesr.
He is currently 20 and I think he now has about £50-60k, mostly invested, although I haven't asked him about it recently - he has his head screwed on re finances.

Ds2 (17) had a CTF worth simular which is now in a JISA. He also received the £15k from my parents and £5k inheritance in the last year. A good chunk went into the JISA, and another is going in shortly now we are in the new tax year. It should be around £30k when he turns 18 and I will strongly encourage him to keep it in an ISA, which ATM I think he'd agree with.
He wanted £1k to build his own PC so kept that back.
He also earned last summer and plans to do so this year, rather than a weekly part time job.
He is more likely to fritter than ds1, but on day to day living - clothes, food, things etc, but is aware that he doesn't want to just spend it all like this.

I haven't saved for them, I have my own savings from which I intend to help them in the future.

If my parents suspected they'd just blow it then they almost certainly wouldn't have started gifting them lump sums, although they'd still have had the accumulated CTF from the £25pm.

You have the best idea on what you think your 18yo will do with the money, and Asia's in your name you have the choice on whether to give it to him or keep it yourself earmarked for him.
But there are no guarantees with anyone!

Give it when he's 25 if you want it spent sensibly.

Why does it have to be given now?

I did this but gave £1k and kept the rest until 25/put into a help to buy ISA. 18 is too young for most kids to deal with this amount.

We are giving our kids the money we saved for them, after Uni. Our daughter graduates this year and only now is realising the value of money, if we’d given her it earlier it would have been blown on fun things.

I didn't tell DS he had £10k until he was almost 20. He had done a year at uni (living at home) and was saving his student loan very sensibly, spending very little day to day. Once he had shown me he was sensible I told him about the money and it's still sat in the account now, s few years later. He was awful with money as a younger teen so I wasn't going to part with £10k until i. knew it would be put to good use.

DD had hers at 17 for a car.

Both my sons had around £10,000 each when they turned 18, some from inheritance and some from us saving their child benefit. My youngest was a nightmare, I wish I never told him about the money, but my late father gave them notes saving spend the money wisely. My son took this that he could spend £500 on a playstation. The money was transferred to them at 16, but I had the savings books. He did get the playstation, but when he saw the money come out of his savings, it did a good thing and the rest went towards his first car, yes a yellow limited edition Corsa. He loved that car because he had bought it. Both my sons are now very careful with money.

I think in some ways £4-5k might actually be trickier than a bigger lump sum. With a really large sum you can probably make a persuasive argument about not touching the capital, it being there for a house deposit etc. £5k while being fantastic probably will be spent on one way or another whether that be travel or supporting living expenses etc. that’s not necessarily a bad thing but if you are wanting it to go towards something specific when older I’d keep hold of it for longer and perhaps give him a smaller amount like £1k to do with as he sees fit.

“Well... it's legally my money, I can hold it all back if I wish. It's in a bank account in my name and won't automatically go to him unless I physically transfer it – but I see what you're getting at.”

I don’t see your dilemma then. You wrote the OP as if it was a CTF and you had no choice.
You know him better than anyone on the internet - if you don’t have him to spunk £5K on crap in 6 months, then drip feed it. Or release larger amount for specific things like car insurance.

On the spunking though… think carefully about your value (literally!) judgments about things. Why is it OK to spend on a holiday, but not blacking out car windows? You could say - OK to spend frivolously on something that lasts 2 weeks, but not on something you really want that will make you smile every day for a few years.

Driving lessons (theory and practical driving tests both passed first time) and first years insurance and tax took care of almost £3,000 for DS. A tidy little ten year old Fiesta cost £4,000 so if you're thinking about driving he won't get as much as you think on £5,000.

It's not a big lump sum really. Reading the title I thought you were talking big money. What sort of fast car is he going to buy for only 5K? It sounds like you don't really even want to give it to him. I'd give him 1K then keep adding to it and give it to him the rest towards a deposit when he's buying a house.

Don’t hand it over - there’s nothing an 18 year old needs to do with £5k.

If it’s not already in an ISA invest t in an ISA and let it grow until he graduates and use it for a rental flat deposit/furniture etc which he will need when he starts work (assuming leaving home to do so). If not leaving home then keep it towards a car or property purchase deposit.

If you can get them interested in learning about finance, then they may put most of it towards their future, such as towards a home deposit (£4k to Lifetime ISA becomes £5k just by putting it in).

Free ebook and podcast episodes that may be of interest to them:

meaningfulmoney.tv/season-13-millennial-finance/

Great that you've saved so much for him.

I definitely wouldn't give it to him. He doesn't need it. I'd giv

Whatever you do, do not give it to him now - he's too young.

I wouldn't just hand it over at 18 tbh. He doesn't need it right now, and it will be far more use to him when he wants to buy a house.

Keep it until he needs it for something important

DD's very lucky (or unlucky), to have saved and inherited good amounts of cash at that age. They spent some, saved some in eady access, invested some in LISA, worked, and saved more.

In their case it was all theirs though, so luckily they were/are very money wise.

Sorry...
I'd give him £500 to play with now, and put the rest in trust until he's 25 or he buys a home, whichever is first.

The LISA is the best option but only if you can trust him to leave the money in it!

How rude.

5k is big money to a lot of people.

My siblings and I had endowments at this age and kept them in savings until we used them to help set up homes. I'll be in your position in a few months op, and will give my dc the choice of using it towards a car or keeping it in savings. It'll be their money, so it'll be their choice really. I just have to trust that they are sensible.