Child trust fund transferring to DC when they turn 18 - how to stop it being frittered away!

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We’ve saved regularly in DCs Government CTF and it’s due to mature soon and come under their control. It’s a decent chunk of money now (c.£40k) and I’m a bit concerned how they will manage it. Sensible kid but not much financial sense (fair enough - I didn’t at 18!). Now I’m wondering about the wisdom of having saved so much into the account. Any tips on how to prevent it getting frittered away on Depop and Deliveroo! Also on where to put it when it comes out of the CTF.

Can they put some in a government JISA, it will lock away 4k every financial year and can only be spent on a house or retirement.
I'd try and get some in premium bonds as its a bit of a faff to get it out.
Pay for driving lessons?

Mine didn't have as much as yours but it has really worried me that it might all be wasted.

Wow that's impressive. It didn't occur to me to invest in DDs. She got £387 last month 😭😂

Do they know about it? I think you need to talk to them about what they could do with this to set themselves up well but also agree an amount to splurge

Go back in time and put less in! Or sit down and explain you worked hard to put that aside for them and look at some options for post 18 together. LISA, ISA, driving lessons and car, deposit for house purchase in the future, offset uni fees, travel all good options

We had a long and very serious talk with our DC where we explained that this was a decent sum of money, it had taken years to save and, whilst it was their money to do what they wanted with, it was intended for house deposit/training/car/investment in their future and if they frittered away it would affect their future options. We also encouraged to put in premium bonds (with the view that it was harder to get at).

it did help that DS had gone through a "frittering" phase in his earlier teens so had effectively learn the message; and DD was naturally frugal (I say naturally, we are a frugal household where money is spent carefully, after consideration, so she was used to seeing that approach)

I’m hoping to persuade DS to put it in a LISA towards his 1st home purchase.

We stopped contributing when each kid got to 10 to try and make sure it had grown to a nice but not crazy amount to limit the splurge amount. It has meant that they have all ended up with slightly diffetent amounts but cant help that.

Involve them in financial discussions. Setting up a LISA / SS ISA might be a decent place to start. You could take the chance to show the statements etc and how being invested in the diversified securities amplified the effect of the cash you’d put in even though the stock market went up and down

Make clear that this didn’t happen overnight and won’t happen again - it’s intended for an investment into the future such as a home deposit or studies?

ps - I think MSE had something about using both JISA and (LISA) for this tax year

I was thinking of getting DS to keep his in premium bonds but it's only 10k, not 40. Maybe a LISA?

University fees?

My son got £6k in March and to be honest, I’m glad it wasn’t more. He has bought a car and is getting a tattoo….! I’d agree on a splurge amount with your son and get the rest invested. Good luck!

DC has a low £10000s figure, but we've spread it across a S&S ISA, a SIPP and then they have a savings account they already manage. It's higher than we'd planned due to DGPs gifting money.

They've know about it for a few years, there was a BBC news story on them and they wanted to know where their was! Didn't want to lie so told them the truth. We've been very clear if they spend it there is no more, they can't touch the SIPP and ISA isn't immediate as have to sell shares first.

Currently they don't like spending money, hope it stays that way.

Our son was outraged he couldn’t just keep it (bear with me before you get irate ) as we knew he’d spend it. It was with him about a week and he blew hundreds and then asked us to take it back and he had a holiday with some and it helped for uni accommodation- low thousands here too. Not £40k sadly

But why doesn’t he have financial sense? You educate your kids from childhood to have it in the same way you educate them how to swim, cook, run a house etc.

By 18 he should know how much it costs to run a home ( mortgage/ rent / all bills) how much is lost in tax, the need for insurance, the need to save and to start a pension etc. He should know what credit is and understand about interest rates and responsible borrowing. He should understand the different savings options and the benefits of ISAs etc. Much of this was covered by my kids schools too and reinforced in final year enrichment with visiting banks etc.

My kids in a similar situation invested what they had in stocks and shares ISA to save for future housing deposit.

Also had conversations with our dc leading up to getting it (not quite so much). He did an ISA to ISA transfer. In a fixed rate cash ISA at the moment and has opened a stocks and shares ISA for this year with the excess. He’ll probably transfer a big chunk to another stocks and shares ISA when the cash one matures. Also intended for a flat deposit.

A bit late to say this now but for any parents of younger children I think it boils down to teaching them to budget and understand money from an early age.
We used little jars to put coins in with them first, then Go Henry cards, then normal bank accounts.

All the way through we encouraged them to think about how much they had, what they wanted now and what they would like in a month's time.

It seems to have worked. Both had about 20k in their funds and both started LISAs for the future, a savings pot for some newer future travel and a bit left for a bit of fun.

I wish financial education was a bigger topic.

I think CTFs together with JISAs are the worst products ever, for this exact reason.

not much financial sense
But it's the parents job to teach that, just as important as teaching them to clean their room or cook.
From an early age they should know about budgeting, saving, investing, credit, mortgages.
Might be a bit late now but you could try. Encourage him to have a current account to manage his allowance/ pocket money. Savings accounts with targets, explain about ISAs and interest rates, credit ratings and so on.
For those with young children start now.
My DC didn't get government trust funds but we did save for them and they knew all about it. In fact we were very open about all our finances and both got lump sums which they saved towards deposits.

That’s why we didn’t add to Ds’s.

he used the £500 that was in there to pay his uni accommodation deposit. Meanwhile we put money into our own savings/ISA which has meant we had the funds to pay for him to be in two NYMT productions & help him to buy music equipment.

Who is it with? Ours was with foresters and they offered a free consultation on maturity. It was really good, made him go through stock markets ups and downs and connect them to world events, discussed different types of investments etc. made them
feel they were making grownup decisions. we also did a very serious chat about how there wouldn’t be another lump like that (in our case 14 rather than 40k). DS1 is still sitting on most of his and DS2 drew down a small percentage for gap year but seems set on the same path.