Worried about transferring saving to child

[Chelyanne]

We started 2 savings accounts for each of our children after birth. Ones trust fund type and one instant access, of course each will be transferred to our children when they turn 18.
My problem here is our eldest is 15 now. She likes us to give her cash in her current account for her birthdays which is fine we want her to learn how to manage her money. So I've seen her bank statement and pretty shocked at how she has frittered all her money away within weeks of her birthday (a lot of Amazon purchases). I really thought we'd drilled it in to her to spend wisely but it looks like it's gone in one ear and out the other. We're pretty good savers ourselves but we did start out thinking debt was okay and it took us years to get out of that hole. I don't want our kids to repeat those mistakes.

Any tips on curbing this impulsive type of spending?
How to encourage them to save for themselves?

You could reward saving. For example if they have £10-£50 more in account compared to previous they get that amount matched. Otherwise they don’t. Explain it as interest.

I think it's pretty mean to expect a child not to spend birthday money.

Agree that a sensible approach to money should be encouraged though.

Another way is to make her save into a regular savings account every month, and treat it like a bill that goes out before she gets to spend anything. I think healthy savings attitude should be about rewarding or encouragingsaving rather than punishing spending. You can do both if you treat saving like a bill that comes out each month.

I did that. When younger I took out debt for various things when I was younger but always saved a percentage of my income. That meant by my 30s I had a huge nest egg.

I think frittering away money can be a good lesson. You can only spend money once. When she wants something and doesn’t have the cash she can maybe come to the conclusion those amazon orders weren’t worth it. Saying that, I’d make sure she doesn’t have too much spending power. At that age, she shouldn’t have that sort of responsibility. I would suggest that you / she transfers anything over £100 into long term savings so she’s not sitting on lots of spare cash.

I’d hold on to it until she was 25.

My grandad had put away savings for my sister and I, and my dad gave us access when we were 21. Although I ultimately used most of it to pay for a deposit on my first car and towards my small wedding a few years later, I did fritter a chunk of it and I would’ve wasted more if I hadn’t already been into my 20s.

Unless she wants to travel, there’s not much your average 18 year old would need a lump sum for. She might not be thrilled at the time, but when she’s older and is able to use the money to put towards a house deposit or something she’ll be glad she didn’t get her hands on it earlier!

She spent her birthday money within a few weeks of her busy, wouldn't most people do the same? Is it the things she bought that you don't approve of?

birthday not busy obviously

@geojellyfish I expected her to spend it yes but not fritter it away. She spent over £40 on axe (which is just lynx) and the delivery cost was almost as much as the product itself. It makes no sense to me at all!!

My ds got 2 k when his dgm died last year. Its gone.
On take away food...
Awaiting him mentioning driving lessons now lockdown ending is near.
It's a no from me...
My friend scrimped as a lp to accumulate a fund of 6k for her ds. A very solid and sound lad of 18 spent it in 10 months with nothing to show.

Keep it til 21 imo op.

Thanks. I think the reward thing might be one we try.

I've changed her pocket money to a monthly SO instead of weekly, told her I've actually stopped it until she kicks her amazon habit. I just want her to think before spending. The savings she's getting are not just a few hundred like her birthday money, my though process was give her a good little start for something like a house deposit. We've got 5 kids and another on the way so we've taken a fair chunk out of our monthly budget to do this for them all and I just want them to make the most of it. There have been times when we've really struggled financially but their savings always got a monthly deposit.

@GrumpyHoonMain

You could reward saving. For example if they have £10-£50 more in account compared to previous they get that amount matched. Otherwise they don’t. Explain it as interest.

This is a really good idea. It used to be that savings accounts would get a decent rate of interest, and you could see it compounding, even on something like the old post office savings books. But now interest rates are derisory.

So, if you do this set it up as a percentage so they can get the compound benefit, even though it will cost you more.

The other advantage from seeing clearly how compounding works is that of course it still does apply to debt.

To be honest, if you are saving substantial amounts (for house deposit, uni fees etc), I would stop now and redirect this money to an account you have control over. Our children will have a couple of thousand in their own accounts when they turn 18, which they can use for travelling, first car etc. But the more substantial savings we are making for them - no chance. Much too big a risk.

My daughter was the same at 15! The amount of rubbish she bought. A highlight I still mention now, was a pair of socks (from China!) that she bought for a fiver and p&p cost a tenner. Actually it was a good learning experience as it was such an unnecessary purchase and so bad for the environment that she claims to feel bad about.
Now at 18, she works at a supermarket ( since she turned 16) and funnily enough is less keen to spend her own money and has saved some too. I stopped pocket money when she got her job.
She still buys too many clothes but does save and sells stuff on deepop.
So maybe my advice is, let her make a few mistakes with her own money and encourage a job when old enough and your sensible financial planning will hopefully win out

@Snowymcsnowsony
I'm hoping she'll opt to keep her trust fund in until 21 but it has to be her decision. The bank one I think has to change at 16yr looking at it, need to find out what the deal is there. I don't think they allow me to hold anything in trust after that age. I've got less time than I thought, arggg

The cft goes to 18 I think. My daughters one went straight to a adult isa I think and I said I will continue to contribute to it for 2 more years if she leaves it alone ( so far so good)

@sashagabadon that is a cracking purchase lol.
She was more reluctant to spend cash prior to us getting her a current account. It was quite comical when we were in shops and she'd exclaim "how much! I'm not paying that!" and put it back. That's why we thought she was ready for an account, though her attitude in general has really deteriorated over the past year. She seems keen on getting a job but I don't expect her to do that before finishing her GCSE's next year. She also has these ideas of moving out at 16! Daft

@cheeseismydownfall

To be honest, if you are saving substantial amounts (for house deposit, uni fees etc), I would stop now and redirect this money to an account you have control over. Our children will have a couple of thousand in their own accounts when they turn 18, which they can use for travelling, first car etc. But the more substantial savings we are making for them - no chance. Much too big a risk.

This is what we did too. Can’t expect a 15yo child to save for university and house deposit. That’s an adult responsibility.

The most they should know at that age is to a) find good prices for the things they want to buy (no judgement from parents on what they buy), b) not spend more than they have, c) show they can save up over several months for larger things they want to buy and d) be able to budget for a monthly subscription or other type membership or charity expense.

The lessons of save for retirement and house should come when they are adults and in first proper career type job.

@sashagabadon

The cft goes to 18 I think. My daughters one went straight to a adult isa I think and I said I will continue to contribute to it for 2 more years if she leaves it alone ( so far so good)

I'd be happy to do that too, hubby not so much but that's because she is a bit of an ass to him lol. I'll suggest the continued contributions if she leaves it to build up more.

The boredom of lockdowns might be behind the unreasonable spending, rather than a real attitude shift. It sounds like you're taking all the sensible measures, I'd try not to panic, and see if it improves once she's got all the distractions of school.

[quote Chelyanne]@sashagabadon that is a cracking purchase lol.
She was more reluctant to spend cash prior to us getting her a current account. It was quite comical when we were in shops and she'd exclaim "how much! I'm not paying that!" and put it back. That's why we thought she was ready for an account, though her attitude in general has really deteriorated over the past year. She seems keen on getting a job but I don't expect her to do that before finishing her GCSE's next year. She also has these ideas of moving out at 16! Daft[/quote]
Online spending doesn't feel like actual spending. Pressing "but now" is whillt different to parting with literal cash.

Online spending is quite addictive and if she is partial to seeking imediate konds of pleasure rewards i would try and get ahead of that now.

A fair few of the main banks offer kids courses around money management and I think she would really benefit from that.

We were only 19 & 21 when we had her so I disagree that saving for things like a house are better left until later. We were only 20 & 22 when we put the deposit down on our house, we did take advantage of a really good 1st time buyer scheme at the time so were quite lucky in that respect. Getting on the housing ladder these days is so much harder.

She won't learn to be money savvy if she's not taught. For amazon my DD knows to only use available on prime products for free delivery. Any other companies she asks me for my phone so she can check my discount card for codes and knows how to search for promotion and free delivery codes. She learnt that the hard way on an order of bits n bobs which had a high delivery cost.

She's also asked me to call the bank to open a savings account that will be linked. When she had her go Henry card she had 3 savings goals which I was impressed with and she was so proud that she bought our Xmas gifts with her own money.

Both of mine will have fairly significant savings by the time they reach 18. We plan on keeping a bit back for them to access at 18 (21?) and tying the rest up in investments until they're 25. I didn't have what they will have, but I know that my attitude to money at 18 was VERY different to my attitude to money at 25! Working and being responsible for my own rent and bills is ultimately what made me truly value money and spend sensibly. I want both of mine to have had that experience working and living independently before they access the main share of their savings.

@feimineach probably is a bit down to boredom. She's already back at school as the teachers had worries about her grades slipping at parents evening, hubby is military so we got a key worker placement for her.

@loopyapp I agree, it is the few quid here and there that is worrying. You see it so much these days, I must seem really tight fisted to her. I spend where it's needed but it has to be wise spending to stretch our budget and save too.
My nana always encouraged saving and I did that as a child. My brothers would spend all their pocket money but I would ask my mum to put mine in the bank so I had more spending money for our holidays (they were always gutted at holiday time lol). I did go through that phase of having overdrafts, credit cards and unsecured loans when I got an income and I really regret it now. It did force me to learn how to budget and save properly though, I'll always remember how restricted we felt for years as we worked to clear it all down to just the mortgage.

@combatbarbie we don't have prime anymore.
You can get many items on free from a collection point, on her way home from school. Or wait a while and spend over £20 on qualifying items for home delivery, granted it's a few days later than prime. You tend to pay a premium for prime items and can often get better deals if you shop around on prime.