early 20s money management

Ant555

Can anyone offer any nuggets of wisdom on how they have handled saving/spending advice with young 20 something adults?

Although we thought we had covered some bases when growing up, our 21 year old has finished University and got his first real 9-5 with a reasonable wage but is now overdrawn most months despite still living at home.

I know the end result is to tell him (ask?) to spend less but anyone encountered similar and got a creative or positive outcome?

MEM62

He's 21 and will make his own mistakes.  You can offer guidance and suggestions but he will ultimately make his own choices - good or bad.  

Ant555

MEM62 said:

He's 21 and will make his own mistakes.  You can offer guidance and suggestions but he will ultimately make his own choices - good or bad.  

Thanks for the reply - I understand your point but, as a parent that is still keen to offer guidance and suggestions, my question was asking if anyone else in a similar situation has had any success with a particular approach.

Daliah

Can you convince him that he needs a budget?
https://www.moneyhelper.org.uk/en/everyday-money/budgeting

Does he have any goals - holidays, his own patch, a car, a family etc etc? Is he paying you rent and his part of ongoing costs - utilities, food, heating? Have you stopped bailing him out when he is in debt?

The_MoneySavingKid

Could the overdraft be cancelled? If they are living at home, do they really need it, might help and encourage checking balance frequently to get into some sort of space re budgeting. Also what on earth do they spend a full wage on? (none of my business, but living at home and still running into overdraft??) If they pay rent, you could increase the rent and start putting some aside - or start charging some amount of rent. Could also try the budgeting open banking apps, which charts money/outgoings etc such as Emma, Plum, moneyhub , or saving features at some banks, round up the change or savings apps such as Chip or Plum also 

lr1277

Give him a dose of real life. Is he paying rent? If not, charge him 1/3 to 1/2 of his net wage to enjoy the comforts of home. What you do with the money is upto you. You could save it up and give it back to him when he moves out to his own place. Or you could spend it. Show him the benefits of being a landlord.
In my 20’s or 30’s I read Rich Dad, Poor Dad by Robert Kiyosaki and it completely changed for the better my spending/saving/investing. Personally I didn’t find the 2nd book about quadrants any use, but maybe i didn’t get the message. The 3rd book in the series about investing was good for me.
There is also Martin’s moneysavingexpert book which I have not yet read.
You could gift him the Kiyosaki book and Martin’s book and see if he actually reads them?

Ant555

Thanks for the input so far - ive got a few things to consider already.

He pays 500 per month paying us back for a car purchased so he could get to work (will be paid off by Christmas) - we take some money for keep and also put money to savings so I guess when I say all that out loud, its not really too much of a bad situation.

I think he goes through up to 200 per week but one thing I had neglected to include is petrol costs which could be 50 per week.

I think ill sit down and try to get a budget together with some targets - even if the target is not to go overdrawn next month.

Thanks to all

cheerfulcat

Ant555 said:

Can anyone offer any nuggets of wisdom on how they have handled saving/spending advice with young 20 something adults?

Although we thought we had covered some bases when growing up, our 21 year old has finished University and got his first real 9-5 with a reasonable wage but is now overdrawn most months despite still living at home.

I know the end result is to tell him (ask?) to spend less but anyone encountered similar and got a creative or positive outcome?

In a similar situation I introduced the kiddo to the Dave Ramsey podcast. She found the stories of people getting out of debt and improving their money management very engaging, not least because many of them were her own age.

diystarter7

Simple but very effective answer is, NEVER buy anything on credit. By all means have a CC etc but always pay it off as we use a cc as we feel safer with that than our debit cards as our current account holds more than several k's.

Therefore buying a car, hols, mobiles etc etc, buy for cash other than a property unless you have the cash to buy it outright.

Me, Mrs D and our children have never every paid a penny in interest to anyone other than the mortgage people We have in the past used cc's to our advantage eG free gifts/tickets/cashback etc etc.

PS: One of the children wanted to by a BMW at 18. They had the money and money for  maintenace etc. However, they listend to us and got a brand new Ford thanks to uncle being a Ford staff so got a big discount and free insurance, did this 3 times not sure if the ins was free all times - sold cars year old low miles hardly any money lost then aged about 22 our child got a year old Audi sports car and we congratulated them as it was bought for cash had money in the bank, bought their first property and mush have saved a couple or more k;s on insurance and car depreciation over the three years plus they had a better paying job. Now  that child is a big, sensible adult with a top flight job and two properties both in London.

If you look after the fivers, the rest will look after itself

It is what it is.

blue.peter

Ant555 said:

Thanks for the reply - I understand your point but, as a parent that is still keen to offer guidance and suggestions, my question was asking if anyone else in a similar situation has had any success with a particular approach.

You might be keen to offer guidance, but is he keen to listen? Until and unless he wants your advice, it's likely to fall on deaf ears.

FWIW, my nephew is a similar age and came to me for advice about money management. I told him what had worked for me at that age (and still works, 40 years on, albeit using different technology), and he found it helpful. The problem is that different things will work for different people, so this might or might not help.

Anyway, my suggestions:

1. Get a money management app - I use AceMoney, but Money Manager EX has the advantage of being free. Others are available.
   
2. Use it to look forward. Set up a schedule of future outgoing payments due. Include credit card bills.Each month, when he's paid, look forward to the period until next payday to see what'll be going out and how much will be left over. Try not to spend more than that. With a bit of experience, he'll know roughly how much he'll need each month, and any surplus can be swept into an easy-access savings account.
   
3. Credit cards can be helpful, but only if they're paid off in full each month. I find it helpful to (a) put pretty much all of my spending on them and (b) get the statements timed so that they arrive a week or so before I get paid and the payments are then due after the next payday and can therefore be included in planning.
   

lr1277

After reading the Kiyosaki book, I got a personal finance software tracker (no longer available).
2 reasons.
1) I wanted to see where I was spending my money as it was running out before next payday.
2) There were fraudulent transactions on my card. My bank said they put me back in the position before the fraud, but I couldn’t check as they closed the account and it was no longer available on my internet banking. Also one of the fraudulent transactions involved a foreign exchange cost. If the foreign currency moved in the wrong direction, I wouldn’t get back all the money spent on my card. As I said the bank closed the account and it was no longer viewable.
Whether you can get your 21 year old to spend 5-10 mins a day entering data and reconciling it against transaction information on his banks’ apps only you will know.
I personally found it comforting to know every transaction on my bank statements was meant to be there. But that is my mindset and may not be the same for your son.
In the last week or 2 there has been a thread about personal finance packages either on the savings board or the bank accounts board.

Edited to add: keeping track of cash was most useful as there are no statements for that. But that meant keeping receipts for every transaction. That is why I entered the data on a daily basis so I could remove the receipts from my wallet. It is a habit I continue. Though I do understand there are now packages and apps that will record receipts by photographing them.