early 20s money management

Brie

could you convince them to set up a saving plan? 

There may be a sharesave scheme at work - might have an annual enrolment window.  I have encouraged younger colleagues to get into these by pointing out that the money comes off their pay so it's really easy, it's guaranteed to either be repaid or one can buy shares and get a profit.  Point out that by putting aside £25 a month for 3 years (that's the standard one where I work) the pay off will be at least £900 which can then be splurged on a car, holiday, something special.  

If there's no sharesave or even share purchase (potential for half price shares plus tax savings) then maybe a regular saver bank account would be good.  Again - set up a standing order right after pay day so there's no temptation to spend the ££ and get a lump to play with in a year's time.  

The other big drain for young workers seems to be all the Starbuck/Costa coffees and uber lunches.  I was shocked when I returned to work after covid eased and found out that colleagues were getting uber/justeat to deliver coffees to their homes!!!  So I have a coffee maker which cost £80 and buy 20 pods from Lidl for under £3.  So 20 coffees cost me just more than £2.  They are paying £5!  My next 20 coffees cost me about 15p each and they are still paying £5!!!  Madness.  Add lunches while at work.  Even a meal deal is normally at least £3 so £15 a week which is soon over £700 a year!!  And many working in an office will buy breakfast as well so likely topping out at £1000 or more pre year for stuff that could easily be brought from home.

So buy them (or get them to buy) a flask, a travel coffee mug, a lunch box, maybe ensure there's a supply of muesli bars for breakfast on the way to work.  

I'm not suggesting everyone should NOT buy meals at/near work but try to limit oneself to 1 or maybe 2 a week as a treat.  

RetSol

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.

If I were in your shoes, having lent him the money to buy a car and subsidised his living expenses, I would tell him now that after Christmas I will expect him to stand on his own two feet financially.  

You have generously helped him to find his feet in his first job but you will not be doing him any favours if you continue to allow him to be financially reliant on you.  Given that he has a decent job I suggest that, once the loan is paid off, he pays you a realistic sum for bed and board.

In my view, there is no point in helping him to budget if he has not yet had to confront life's realities. That in itself ought to educate him. 

Ant555

Thanks again.

I am sure I can approach the subject in a manner that will work and make suggestions - although I feel I will need to keep a regular check on progress rather than wait till the end of any given month.

Currently he transfers 1000 to us on payday - we put 500 towards paying off the car (he paid for half of it from his savings from his part time jobs over the years), 300 goes straight into his savings account and 200 for food/board.

I think we just need to put a plan together for budgeting within the 'whats left' figure.


Cheers to all.

lr1277

If you are not aware, most books on personal finance suggest you pay yourself first (i.e. save something) before dealing with the bills. This builds up your cash reserves which can be used as an emergency fund or an asset base.

eskbanker

Ant555 said:

Currently he transfers 1000 to us on payday - we put 500 towards paying off the car (he paid for half of it from his savings from his part time jobs over the years), 300 goes straight into his savings account and 200 for food/board.

Obviously he needs to transfer money to you for food/board and loan repayments, but why is he passing money to you for you to then pay into a savings account in his name?  Apart from anything else, it makes no financial sense to have savings while paying overdraft charges at a much higher interest rate, but perhaps this is symptomatic of either a lack of parental trust in his ability/willingness to save his money for himself or a lack of financial confidence on his part, either of which are root causes worthy of attention IMHO, rather than addressing symptoms by retaining control.  Apologies if I'm misreading the situation here though....

Bigwheels1111

I always gave my dad the spare money I had to save for it me.
If I needed some back it was a loan from him, that made me pay it back.
I know it sound strange but it worked for me.
I saved a 30% deposit for my house. 

RetSol

perhaps this is symptomatic of either a lack of parental trust in his ability/willingness to save his money for himself or a lack of financial confidence on his part, either of which are root causes worthy of attention IMHO, rather than addressing symptoms by retaining control.  Apologies if I'm misreading the situation here though..

My thoughts exactly. 

We don't know the background but my instinct is to ask him to pay his way (see my previous post on this thread) and then let him make his own mistakes.

FireRetire98

Hi, I'm 24 and in a similar position. I work and am living at home with the family. 

I'd maybe suggest asking him to look at the reality of finance for young people. While you're at home you're going to have the most disposable income for a long time. That's why I'm making the most of it by saving and investing as much as possible. With the average house now costing about £300k, I realistically save/invest about ~£1300 a month into LISAs, stocks and shares ISAs, and savings accounts. The rest of my income (about ~£940 a month) goes into a workplace pension. The pension contribution doesn't make a massive difference to my take home pay because of the employer contribution and tax savings.

I realise I'm probably on the more extreme example of saving, but hopefully this is a useful example of what you could do. Get him to make the most of not having a mortgage etc!!!

diystarter7

Bigwheels1111 said:

I always gave my dad the spare money I had to save for it me.
If I needed some back it was a loan from him, that made me pay it back.
I know it sound strange but it worked for me.
I saved a 30% deposit for my house. 

Nothing "strange" many people that I know have done it but I'm not from the UK orginally.

pjcox2005

Ant555 said:

Thanks again.

I am sure I can approach the subject in a manner that will work and make suggestions - although I feel I will need to keep a regular check on progress rather than wait till the end of any given month.

Currently he transfers 1000 to us on payday - we put 500 towards paying off the car (he paid for half of it from his savings from his part time jobs over the years), 300 goes straight into his savings account and 200 for food/board.

I think we just need to put a plan together for budgeting within the 'whats left' figure.


Cheers to all.

Personally I think you're overstepping the mark; easy to read more into a sentence but "I think we just need to put a plan together for budgeting within the 'whats left' figure." reads wrong to me as that's for them to decide. Would you appreciate it if they said they wanted to go over your finances and deem what expenditure is appropriate?

If they're 21 then they can only be out of university for a few months, finding their feet with a new job. Yes instill good habits, but is it crazy for them to enjoy the first year earning by spending it on things they may not have been able to during uni years? 

If you feel it is appropriate to charge board then do so and set out those terms clearly so everyone understands exactly where they are but anything else around going over their expenditure is not giving them respect as an adult.

At most, mention benefits of pension, benefits of ultimately having a plan to rent or buy and how that's easier with savings, and you can ask them outright if they want to chat through budgeting, but if they say no then that's perfectly fine (as it will be for you to say no to help if they get themselves into an issue with debt).