Kids Pay Rent We Save it for them?

katie4

there isn't really a question here just sharing a thought i had. Growing up I remember when i got my first job and my parents telling me I'd have to pay rent i thought they were joking at first but nooo.


Anyway it made me think as a 32 year old we really struggled to save a deposit for our own home and i'd hate for my children to struggle the way we did.


I don't want to hand them anything on a plate but i thought when they are old enough (they're only 5 & 6 atm) and get their own jobs that i too would charge them rent, say £100 pm for example and then put this into a savings account (in my name) then when they're old enough / responsible etc i would then give them their money back that i had in essence been looking after for them so they would have it for a deposit (or any other reason they may need it for)

Rheumatoid

katie4 wrote: »

there isn't really a question here just sharing a thought i had. Growing up I remember when i got my first job and my parents telling me I'd have to pay rent i thought they were joking at first but nooo.


Anyway it made me think as a 32 year old we really struggled to save a deposit for our own home and i'd hate for my children to struggle the way we did.


I don't want to hand them anything on a plate but i thought when they are old enough (they're only 5 & 6 atm) and get their own jobs that i too would charge them rent, say £100 pm for example and then put this into a savings account (in my name) then when they're old enough / responsible etc i would then give them their money back that i had in essence been looking after for them so they would have it for a deposit (or any other reason they may need it for)

We did that for our son and have just given it back to him as he has moved out into rented accommodation. We did stipulate, and he agreed, that it should be fed in to a LISA until he wants to buy.

xylophone

If the LISA is still around when your children reach 18 and they are working and living at home, you might tell them that you will not charge them rent on condition that they open a LISA and pay in the maximum possible each month?

Malthusian

What if they call your bluff and move out?

A better option would be to help them save the money in their own name and invest it sensibly for the day they want to buy a house. You don't have to wait for them to "become financially responsible" by magic, you're their mother. Unless they go totally off the rails and refuse to be influenced, but then you can't help them whatever you do.

How are they supposed to become financially responsible if they aren't allowed to control their money? Handling money is like any skill, it requires practical experience. You don't teach a teenager to drive by driving them everywhere until they're 25 and then telling them that now they're old enough they can drive on the M1.

If you charge your kids rent as adults then it will be taxable as income. Plus they will have tenancy rights and you will need to comply with your responsibilities as a landlord. Yes you could do it "under the table", pretend the money is a gift and hope that your kids won't dob you in, but the same is true if you were charging rent to a stranger, it doesn't mean it's a good idea. Plus it's Inheritance Tax inefficient if you are over the threshold and your kids are your heirs.

sal_III

So at what age do you expect them to become financially responsible, if they are able to work, yet still not responsible this points you expect it to be quite late in their lives. How are they going to learn it if you keep their savings in your name?

Much more sensible would be to gauge their income and set them a savings goals, then reward them for achieving them - like the Gov bonus for LISA etc. If you want to drive them out, so you can finally have some peace and quiet with the missus, there are better methods than charging them rent

I know that times has changed and today's teenagers are not like yesterday's teenagers, but I will nevertheless try to do with my boys (2 and 6) what my parents did with me 20+ years ago - teach me financial responsibility by the age of 18.

This way they didn't have to charge me rent or hold money in their name until I become "responsible"

cloud_dog

Growing up it was always understood that once we started a permanent job we would contribute to our household. 20% of your take home was the going rate then, and it is something I am instilling in my DD, preparing her so to speak.

I'm sure most of my contributions came back to me in one way or another and I'm sure much the same will happen with my DD.

cloud_dog

Katie....answering your question (for a change), I would probably consider adding money in to the LISA. Perhaps offer to contribute whatever amount they contribute.

Dorian1958

Both MrsDorian and I paid "board" (in my case 30% of take home pay), that was the culture of the time where I grew up. I did not begrudge it because I knew what to expect. Unknown to her, MrsDorian's parents saved it and handed it over as a wedding present, a very nice surprise. Different times I suppose, these days contributing to a Lisa is much more mse. I doubt it would be taxable in any case, rent a room scheme?

MaxiRobriguez

If you can afford £100 a month each for them both, and start drip feeding that into a S+S ISA, you should have at least £20k for them both by the time they're 18.

You can gift them this as a deposit and ask them to pay it back over a few years.

DairyQueen

Gobsmacked. Working adults whose parents do not expect them to contribute to their living costs? Perhaps explains why parents are lumbered with their adult kids for decades.

How does relieving adult kids of necessary costs teach them financial responsibility?

iglad

katie4 wrote: »

there isn't really a question here just sharing a thought i had. Growing up I remember when i got my first job and my parents telling me I'd have to pay rent i thought they were joking at first but nooo.


Anyway it made me think as a 32 year old we really struggled to save a deposit for our own home and i'd hate for my children to struggle the way we did.


I don't want to hand them anything on a plate but i thought when they are old enough (they're only 5 & 6 atm) and get their own jobs that i too would charge them rent, say £100 pm for example and then put this into a savings account (in my name) then when they're old enough / responsible etc i would then give them their money back that i had in essence been looking after for them so they would have it for a deposit (or any other reason they may need it for)

Thats what my mum did with my brother and I when wee both started working and were still at home.

She basically put our rent money into a building society and helped with a deposit on our first houses.

She never actually told us what she was doing so it came a s a welcome surprise.

The key to it all is not to tell them about it.