What should teen spend windfall on

[Jaws2025]

My ds will be 18 in a couple of months. At this point he will receive money from gps, of around £15k - lovely! Clearly I want this to be of use to him in the future, and although it's nice to spend some on something fun I really want most of it to help with future expenses such as getting somewhere to live. I know he would probably spend most of it on a car, which he doesn't "need" due to where we live and hasn't yet got his test.
GPs have said it's up to me how the money is presented to him. Does anyone have any ideas? Should I say he has a few thousand to use for a car later on and the rest should go into savings/ISA for his future?
Should say, he lives at home and has no expenses, and has money from his part time job for whatever he wants.

Yes, sorry I meant that I thought the gvt only paid the 25% bonus for 5 years - but I don't know where I got that idea, I've just checked and I think the bonus is paid every year you put something into your Lisa.

Ds used his 5k from grandparents tonsee him though uni, paid for accomodation deposit ect, dd just 18 will do the same. Both are sensible and spent maybe £500 on a laptop and in dd case a new phone. Rest was saved

Sorry if I’ve missed something OP but this will be DS’s money and it’s up to him how he spends it. You can advise but only if he wants your advice. Does he?

The money will be given to me to give to him. The givers are fully aware that handing a teenager with no life experience a fair bit of cash on his birthday might not go well! I will want his opinion but if the plan is to spend it all on a holiday for him and his mates, for example, I am not going to let that happen. Car money and the rest saved or invested sounds like the plan that would be best, and he'd be very happy about the car part!

Lisa for house deposit
or
sipp for pension if you have other plans to help with house deposit

Ah OK so it’s not his money but money to be used to benefit him. Sensible because many 18 year olds would spend it on fun things then regret it later

I would allow a certain amount£1000? for a holiday or other fun birthday experiences but lock the rest away until he is older/ wiser/needs a car / house deposit. Would the Grandparents be willing to 'only' allow this much as fun/ birthday money but tell him that there is a £14000 locked away for these specific purposes. That way he has all the fun and excitement of a generous birthday spending gift from his lovely grandparents, knows they have been even more generous but understands that he has no chance of getting the rest until something important comes up. Lucky young man 😄

I would start talking to him a bit earlier and say you and his b generous grandparents would like to help him plan a secure future, and what does he think his priorities are, short, medium and long term.

Then start talking him through types of savings accounts and discuss with him how he thinks it would be best invested. Show him how £15k would be worth £15750 after a year in a high interest account and £16537.5 after 2 years . So demonstrating the benefit of not wanting to spend it all early on. And getting him to feel responsible about this money even though it is in your bank account,

If his priority is a car, discuss using some fir driving lessons but finding those half and half from the money and his earnings.

Get him to research total costs of car ownership. It may not be a priority.

Thanks so much for all the replies, didn't expect so many! I will think it all through.
I knew they'd been saving for him but didn't think it would be so much.

If he already has spending money from his job, he doesn't 'need' to treat himself, he can already do that. Even holidays or tech will be within reach unless he's a real spendthrift who blows every penny he earns.

If his expected career pathway is in a trade, even on apprentice wages, he'll have a fair amount of money at his disposal, even when living at home so if you live somewhere where buying a house is likely to be affordable to him in the next 5/10 years, a LISA is a good idea because it's £1k pa free money if he puts the maximum in himself. A cash ISA or normal instant access savings account for the rest, whatever pays the highest interest. Tax won't be an issue in the short term.

£15k would be a good sum to pay for driving lessons and a car/van, which will be a good investment if he's going to be working in the construction industry. He'll probably work for someone else in the first few years at least, so won't immediately need to spend a lot on tools or other equipment, but he might want to think about saving for that eventuality too.

Yep
Like 1k max for fun.
Get the rest compounding

why? Premium bonds would be the last thing I would suggest to most people, especially a young person.

£1k for some fun. Being able to travel as a young person can be a very rewarding experience. I've never regretted any money I've spent on travelling to other countries.

£1-2k for investing in himself and skills. Maybe driving lessons or acquiring a skill that he can monetise.

The view of pensions, LISA or ISAs is going to be varied. There isn't one right answer. If buying a property is a desire in the future then maximising a LISA for the next few years kind of makes sense.

I'd maybe put £4k in a LISA now which will be made up to £5k by the government. So you will £14k left, I'd maybe put £k aside as the start of an emergency cash fund. The remaining £10k I'd put in a S&S ISA in a global index fund with the intention of leaving it there for decades.

I guess wanting a certain type of car is a want for many young people, especially lads, but if I could go back int time and tell my younger self anything it would be to not waste money on things like cars.

DD1 looked on MSE for advice and told me that she was getting a Help to Buy ISA when she was 18. She had a P/T job from 15 and indulgent DGF paid for a car and driving lessons. She also has a cash ISA. DD2 was too young to get a Help to Buy but looked on MSE and got a LISA. She's 10 months into her career and maxing that out, paying into a cash ISA and enjoying herself.

Both are pretty good with money and know that we will be sounding boards for them. From them opening their first bank accounts that they could manage when they were 12, I have always encouraged them to use MSE - that was how they each chose their 1st bank account.

Some youngsters are good and sensible with money, others are not. Only you know what your DS is like. We found honest and open conversations plus reputable sources of information worked for us.

Does he have a grasp of the basics - how to accumulate wealth over time, money management skills, attitudes to debt, savings, and investing?
I think this would indicate how successful any suggestions that might help are likely to be. If you don't really understand these yourself, it can be rather tricky to explain to someone else and highlight the benefits of any plan. It would be a good idea to get to grips with these concepts first.

Approaching it in terms of percentages might be a good way to start discussing it with him.

For example, what proportion might be prudent to put into the following:
-Long term investments (LISA; S&S ISA and SIPP)
-Medium term savings in a cash ISA
-Short term savings for worthwhile purchases such as driving lessons, upgrading necessary tech, interview suit.
-a rainy day savings account for emergencies.
-Fun money to splash on something he enjoys - a holiday or hobby.

If you can agree on a template with him, it will provide a sound financial basis going forward. Also, helping him set up long term investments at this stage will smooth the way for him to continue to invest in a LISA, S&S ISA and a pension if these are already in place (even if only a small percentage is invested initially, the ball is rolling for him to add more in future, and some initial inertia is bypassed).

Ds had about 8k at 18 and he saved half of it, used some for first year of uni and then some fun with some of it. He added as he could to his savings and it helped with the deposit on his first house which he had just bought at 24. He took our advice and was sensible. I think letting him spend a bit without judgement or restrictions but save a good sum is the way to go.

That's a really good breakdown, thank you.

And thanks everyone.

Be very careful about investing in a LISA especially if you live in the South East and a potential first home might cost over £450000. You will lose money.

The OP has already said that he won't be spending anywhere near that amount of money on a home, as won't most FTBs. The whole point being that anyone who can afford to spend close of half a million pounds on a house shouldn't be getting taxpayer assistance to buy one.

What a gift. I'd save the £10k towards a house deposit. Remaining £5K I'd Spend a bit now as a treat and save a bit towards a car, spending through uni.

No uni unfortunately.
Lots of good ideas here. He has more expensive tastes than me and could splurge a lot on designer gear and iPhones! But he won't want to live at home forever and knowing he has a deposit should be really motivating for him.

I explained that it's best to use windfalls and savings for big ticket expenses he might have in the future between 18 and 25 - a deposit for a rental, a car for his first job, a trip abroad he wants to take (and that fun money, alcohol, and everyday expenses including rent, petrol, car running costs need to be afforded out of monthly income, otherwise they are not affordable when the savings run out). I used this as a good opportunity to explain all this, look up rental prices and mortgage deals on the right move calculator, get them to think about what expenses and plans they might have and make a list. I said it was not to be spent on other people (loans or gifts or holidays - including girlfriends), it was for him and not wise to discuss finances with others. This conversation and some reading up on links I sent was mandatory before coming into the money. Then I said, when it's gone it's gone, it's your money for you to decide and if you fritter it then that's your decision. I explained what I won't be paying for in the future after 18. It was really helpful to do.

He's an adult. I don't think it's up to you , what do the givers of the money want him to spend it on?

The givers have deliberately given it to me so that it can be spent on something for his future benefit. They would be totally happy for some of it to be for fun however.
I don't think I'd be a good parent if I let him piss away the best chance he'll ever have of savings/house deposit/security for his future.
What if he gambled it? Bought crypto? Got scammed? (All things he has shown an interest in/had happen to him already).