Is it right to save for kids?

[Deleted User]

Sorry if this is in the wrong section. I did scan down looking for the best place to put it.

This isn't really a question of what's the best way to save for our kids, it's whether we even should.

WHY WE SHOULD:
This bit is pretty obvious really. Life is expensive, and can be tough. Especially when you're young and have yet to build yourself a career and reputation. The first rung of the property ladder is hard to get onto etc. I don't need to go on. We all know all this. But....

WHY WE SHOULD NOT:
I might be very wrong here. Times have changed since I was young, but here's what I'm thinking.
When I was growing up, my parents never had the proverbial pot to wee in. At a young age, I had to figure out how to be independent. When I wanted a new bike, I had to save up and do little jobs for people to earn a fiver here and there towards it. I had to build my career from nothing but sheer determination and persistence. I'm sure that's true for many here. My circumstances were no harder than most. But I've done alright. I'm not rich, but I've got my house and my family and we're comfortable. If my parents had told me on my 18th birthday that I had a few grand coming my way, remembering my attitude at that age, I'd have just blown it. It wouldn't have gone on education or a house deposit. It would have gone on designer clothes, and clubbing. Then quickly I'd have nothing again, only now I'd have had a taste for a lifestyle I couldn't sustain, and every fiver I earned, instead of being saved for that new bike (or education etc) would be a couple of pints in town.

Of course I painted a slightly bleak picture there. And not everyone would blow it, but it does get me wondering, if by saving for my kids, if I'd really be doing them a favour. 

YORKSHIRELASS

My parents weren't well wealthy, but they handed money out to me whenever I asked for it.  When they bought me my first car it was supposed to be a loan but I never paid a penny back!  This did me no favours whatsoever and I am not blaming them for me ending up with massive debts but it didn't help.

If your children are young, and you can afford to save for them, then yes absolutely do it, but keep it in your name.  You can always decide later what you do with the money.  

My eldest is 22 and has health problems so he has needed financial support from us.  He also did an apprenticeship and because we live in the middle of nowhere he needed help to buy a car and also to buy equipment.  He has always contributed to the household finances when he lived at home though, even if it wasnt much.  

My youngest is 20 and at Uni.  We said from the outset that we would help him financially, but said we weren't paying his beer money and he had to get a job for that!  

Both boys are fiercely independent with their finances, and in fact I worry that DS2 would rather not eat properly than ask us for financial help.  DS1 has saved thousands for a house deposit in a fairly short period of time by working extra hours and being frugal.

Its a fine balance I think, but certainly just handing money over to your kids that they dont really might not always be a good idea.

rach_k

Whether a young person will waste money or not is going to be different for everybody; if you have sensible parents who drag you up properly, having money waiting for you won't spoil your attitude towards money or work.  Out of the four kids in my family, the most frugal as a young person was the one of us who had a nice lump sum sitting in the bank... so while everybody has that tale of an 18 year old who drank away their savings, it certainly isn't going to be everybody.

I think young people now have it harder than we did (and I'm only mid 30s), so while it's fine to say, "My parents didn't save for me so I worked hard and bought a house,", it's looking more likely that children today will work hard and still not be able to buy a house until they're middle aged, or never... which isn't something I want for my kids.  I would prefer to save, give them a lump sum towards a house and then let them work out how to make that a reality, rather than giving them small amounts regularly when they're in their 20s to help them live (which I would do, if they were struggling).  

Rosa_Damascena

Beardybaldy said:

This isn't really a question of what's the best way to save for our kids, it's whether we even should.

Is it worth offering young people a financial platform that they can choose what to do with when they come of age....?

It strikes me that those that have benefited from good parenting will make the best decisions.

Rosa_Damascena

rach_k said:

Whether a young person will waste money or not is going to be different for everybody; if you have sensible parents who drag you up properly, having money waiting for you won't spoil your attitude towards money or work.  Out of the four kids in my family, the most frugal as a young person was the one of us who had a nice lump sum sitting in the bank... so while everybody has that tale of an 18 year old who drank away their savings, it certainly isn't going to be everybody.

I think young people now have it harder than we did (and I'm only mid 30s), so while it's fine to say, "My parents didn't save for me so I worked hard and bought a house,", it's looking more likely that children today will work hard and still not be able to buy a house until they're middle aged, or never... which isn't something I want for my kids.  I would prefer to save, give them a lump sum towards a house and then let them work out how to make that a reality, rather than giving them small amounts regularly when they're in their 20s to help them live (which I would do, if they were struggling).  

Its a double favour - gift it early on and it will have a bigger impact, plus be spared from IHT when the time comes. But only possible if you have it in the first place, of course!

IntoTheForest

We are most definitely saving for our children. We worked hard to get on the housing ladder and to become financially stable but it is only getting tougher for future generations. I really worry about the world we have brought our children into and the challenges they are going to face. 

All that being said the money we are saving for them is in our names. The money will be gifted with conditions and only used towards things that will benefit them. They will get a few thousand once they turn 18 but they aren't aware of the other saving we have in place. 

Mickey666

YORKSHIRELASS said:

My youngest is 20 and at Uni.  We said from the outset that we would help him financially, but said we weren't paying his beer money and he had to get a job for that!  

That was one thing we never had to worry about as junior has never really liked alcohol.  He'll occasionally drink a cold cider on a hot day but seems to basically prefer water.  Really!  He doesn't even like tea or coffee.  Takes after his mother in that respect, though she drinks coffee but never tea and has only had two alcoholic drinks in all the years I've known her - not out of any sort of principle, she simply doesn't like the taste.  Must have saved us a small fortune over the years, plus we've never needed the "who's turn is it to drive" conversation after a night out!

oystercatcher

I saved for my children but I certainly didn't just hand it over when they turned 18. Part of my savings (mostly from child benefit as others have mentioned) has always been allocated to them and dived into equal amounts so when one needs help with a car / uni / house deposit / wedding  they have had some of their amount. One has yet to buy a house so there is still some money waiting for him.  I have never made a big thing about it just helped without them asking or expecting so their savings for house deposit have been increased etc. .
All my children have been very sensible with money , probably due to the way I brought them up. I have been quite amazed to watch 'in-laws children' spend vast amounts on multiple foreign holidays and brand new cars, parties and takeaways and then be unable to afford anywhere to live to the extent of two adults and a baby living in parents dining room for 4 years !  They blame the system! I don't say a word!
  

maman

As others have said, how you bring your children up is a far more important question than whether you choose to save/gift them money or not.  I'm not sure whether OP is posing a hypothetical question or already has children. I'd suggest that teaching them the value of money, how to budget and saving/spend wisely is the best help you can give them. This should start really young and develop as they get older. By the time they have money of their own whether from a  job or student loan then they'll know how to behave around money. We chose to continue giving our DDs an allowance while they were at university.

We did this with our DDs and, since leaving home,  they've never asked us for a penny. BUT, we do enjoy gifting them money regularly just because we want to and we can.  It's great to be generous at birthdays or treat them to a holiday or foot the bill for a meal when we're out together (Remember that?😉). 

I know some people think it's a version of tough love to make children be independent. I don't agree but I understand it. Personally I enjoy giving but I wouldn't if I thought they expected it IYSWIM. Giving them time and effort to bring them up properly is far more important, and sometimes more difficult. 

littlegreenparrot

I think it's important to be realistic about what a young person can earn. 

I started working part time when I was 16 whilst studying. There is no way that I was ever going to earn enough on minimum wage to keep myself at university. Even though I was frugal and worked when I was there and through all holidays.  As it was I didn't learn to drive until I was 25 because I couldn't afford it, those hard earned savings I was gifted had gone on the degree. That was in the late 90's, it would be much worse now. 

Even if you are good with money and doing everything you should it helps enormously if parents can help you out. 

wondercollie

I tried to save our Family Allowance for our boys, but kids are expensive when there was only one income coming in.  So some of it went for snow suits, winter boots, Cubs.  After I started working my Family Allowance was reduced because it's income based here.
Both of our boys knew if they wanted to go to University, they would have to pay for it themselves and get every scholarship they could.   They lived at home and we paid for their books (we knew how expensive textbooks were due to my time in Nursing School)
We were able to give them a downpayment for their home purchase ($40K).  We thought we'd rather they have their inheritance now, than make them wait for it.  Interest rates are low , so it made sense to gift them the money.  My husband was very pro this because his Mother is in her 90s and is leaving him over $1,000,000 when she dies.   He'll be in his 70s by then.  It would never cross her mind that dispersing part of the estate earlier would have helped her sons, she prefers to sit on a very large nest egg and has complained over the years than none of her grandchildren finished their degrees or have bought homes (she lives in one of the most expensive areas of Canada)  My sons have both joined the military and as we don't ive in an expensive province have been able to purchase home.  
It's a family thing.  Neither myself or my husband had much help from our parents and I think that's why we've decided to do it differently with our children.