Our financial situation

[Orangesandlemons77]

Please can you tell me if you think our family financial situation is fair?

We've paid off the mortgage a few years ago and have two teenagers, the eldest is 19 and has been working on a year out before university which he is starting after the summer.

DH and I have separate finances, he is self employed and I get a disability benefit (PIP) and also cont based ESA, along with child benefit and a small amount of Child tax credit. I pay for all the food shopping which is around £800 a month.

DH is self employed and had a unit he rents for about £500 a month, and other costs, he therefore earns around £14,000 profit a year and pays the other house bills which again comes to around £800 a month (council tax, energy etc)

DS1 will be getting the full £8,600 stay at home student loan and has calculated most of this will be taken up with e.g. his car insurance (£450 a month) also things like a phone contract (£100 a month) gym membership (£50 a month) and expenses, I think he will also be working one day a week in his minimum wage job.

DS1 also has a child trust fund of 12K and 4K of this he has invested in a LISA and most of the rest in an ISA. he used the rest towards his car, and driving lessons last year.

Does this all sound reasonable and should I or DS be contributing more?

I'd be happy to contribute more myself but am in the middle of a PIP review and they cans top it while you have to appeal so saving a bit extra in case of that. Thanks

meant to say has a unit

Is your DS paying anything towards his keep? At the very least he should be paying for his food and anything else he’s costing you to live there.

This is what I am wondering. He has offered, but we have not decided what he should be paying. Also a bit worried the other costs are taking up most of his money (but then that was his choice to choose an expensive phone etc). Thanks

When you go over to universal credit an amount will be taken off for having an adult dc at home. At the very least he should be making the amount back up for you...

Yes. We have not yet been migrated over I think this is due to my ESA. That is something to consider as well. Thanks

I would look at what his essential costs are and take a view. His phone and gym membership both look somewhat high on an £8,900 loan - he could get cheaper for both - the car insurance is horrible, but if he needs a car and his car isn’t extravagant, that may just be what it costs, so I might make allowances for that. But he certainly should be prioritising living costs over expensive phone and gym, so I wouldn’t reduce what you take because of those.

Yes he bought the car outright so won't be paying for that, just fuel. Yes he does seem to be living quite extravagantly in general. I was thinking, but he's a student he won't be able to contribute, however looking at it he's getting over 1K a month with his part time job as well and it would be good for him to contribute something. (I did post previously about this and got a lot of replies that people would not charge a student offspring)

OP I earn over £50k a year and I wouldn't dream of taking out a £100 phone contract or £50 a month gym membership. He needs to pay towards his essential living expenses and you are not going to do him any favours by allowing him to keep the whole £1k a month to spend on whatever he pleases.

Does DS1 really need a car? Few students have one, especially when insurance costs over £5k pa. Could he cycle and use occasional taxis?

Why on earth is he spending £100 a month on a phone contract? That's insane.

Why does your DH earn so little? NMW is £23k pa, so he should aim to exceed that being self employed to make up for lack of employer pension contributions etc.

DS should at least pay enough to cover his costs - food and a little extra to cover showers, laundry, any subscriptions that are mainly for his benefit etc.

What is your income?. You and DH should aim to have the same amount of personal money after all joint costs are covered and if anything, it sounds like you're falling short on that front currently.

Thanks! Yes I agree.

He could do without the car, but he loves it so can't see him giving it up. Just checked and he can't park at the university anyway as we live within the area, he will need to take a bus anyway.

I'd work out what you think is reasonable to charge DS (which should most likely be less than it would cost him to live elsewhere but not so little that you put yourself in financial hardship.

I don't think you should consider his outgoings - it's his choice to buy an expensive car (my 19 year old was paying £200 a month on car insurance), phone, gym membership etc. That might have been reasonable if he was working, but he will have to scale down his expectations now he is a student. It sounds like you weren't charging him when he was working, so he should have a good amount of savings built up?

this. He’s an adult and needs to learn about financial responsibility. He needs to be making a decent contribution to food and other bills, I’d say at least a few hundred a month.

Yes, we weren't charging him then, it seems he was on an emergency tax code and is expecting a tax rebate. Maybe we should have so he would have got used to it. I was thinking he could be saving for uni, only found out recently what his outgoings are.

I wonder why his car insurance is so expensive? I think it is only third party. maybe he could get it cheaper.

Sometimes third party is more expensive than fully comp as it's consider to be an indicator of a high risk driver by insurers. It's also a hell of a financial risk for your DS because if he smashes his car up, or it sets on fire that's his money gone. Is it a high insurance group model?

But he definitely needs to learn that expensive phone contracts, gym membership and a spendy car that he can't even use to get to uni are luxuries that are paid for after he's paid his basic living costs.

I didn't even know you could get a £100 pm phone contract, I thought everyone was sim only these days? Are you sure he's only paying for one phone?

I wonder why his car insurance is so expensive? I think it is only third party. maybe he could get it cheaper.

We found with DS that fully comp was actually cheaper than third party. He also brought the cost down by having a black box and by having DH as a named driver. You need to play about with the car insurance sites by changing 1 or 2 factors.

His lifestyle is not what student loans should be funding. No wonder the country's bankrupt.

I’m lost. Or at the very least bemused….

The £1k per month from his part time job… is that going to continue whilst he is a student? If so then why has he taken out a loan?

Whether he ‘loves his car’ or not it is bonkers to be spending £5000+ per year on insurance in a low income household when the car isn’t needed for work or uni. Ditto £100 phone.

So he's spending £450, plus presumably car tax, plus the cost of maintaining and fuelling his car, on a non essential?

No, sorry - that's not how the real world works.

I'd charge him £250 a month to live at home and if he wants to spend the entire other £750 on his car, phone and gym that's on him. I suspect he will realise pretty quickly that the car's not a priority.

Sounds like a plan!

It's helpful getting these replies as previously, I did a post asking what to charge my student son and got all these replies that they would 'not ask a student for rent'

Just had a chat with him and he was on about getting the bus to university and if necessary not using the car and saving on the tax etc

It would have been helpful if he has discussed any of the payments with us e.g. car tax before going ahead and taking it out really. Thank you I will mention that about the tax sometimes being more reasonable not being third party.

No, he's just going to be doing one day a week on minimum wage, so might be £50-£80 a week?

I'm a bit lost too, all this has only recently come to light. I presumed he was saving for university and didn't realise the loans were so generous for those staying at home.

Well he hasn't got the loan yet, that will be in September. He's been working until now to pay for it.

Thinking of loans as "generous" seems dangerous to me - they are loans, not income! They need to be repaid back (at least assuming DS earns a reasonable wage). So if his logic is "cool, I have loads of money to spend on stuff" I think that's a bad way to think about it - he is borrowing money, so is stealing from his own future. He needs to start balancing his books, and things like expensive gym membership and car costs should really be coming out of earnings not loans.

I think £50 a month on a phone contract is insane. My teen bought a cheap smart phone and pays £8 a month with Smarty. He also goes to the gym but does the off peak as he's a student so can go at less popular times. Your DS should pay towards his food at least. What about suggesting £30 per week?

@Bjorkdidit makes a really good point. Your DH really needs to look at what he's Earning.

You will be migrated to UC at some point and (assuming DH isn't a Carer etc) then he will be expected to make the equivalent of NMW after a year "Start Up" Period. It's called the Minimum Income Floor - it might be worth having a read up.