Advice for son just starting out

Userdaffodil75

Hello, I am looking for some help with how best to advise my son regarding money. He’s 22 and lives at home, bringing home around £2100 per month. He has a student loan and runs a car which is paid for. I’d like to help advise how best to save money and make it work for him, hopefully to install some good habits for the future. I’ve never really been very good with money, I have been in and out of debt most of my adult life, I don’t want him to make the same mistakes as me, so was hoping for some tips to set him on the right track. He has no real inclination to move out just yet but will probably be looking in about 3 years time and has around £13,000 in savings but it is earning very little interest in a Lloyds account. Any tips advice would be really welcome, many thanks in advance. 

Bigwheels1111

Help to buy ISA is a no brainer unless you live in London.

https://www.gov.uk/help-to-buy-isa

Then spare cash into another ISA until 20k limit per year is reached.

After that regular savers are the way to go.

Lost of account types listed here.

Select sort, rate, for best %.

 

https://moneyfactscompare.co.uk/savings-accounts/regular-savings-accounts/?quick-links-first=false&product-favorites-first=false&sort-order=AER&sort-order-text=Rate

20122013

If he is not already done this maybe start tracking his spending vs income, by using a spreadsheet. I find it easier to see where I am spending and also where I can trim. and from there, he can work out pros and cons of savings, spending and paying off loans. 

InvesterJones

The best investment he can make is into his own knowledge so he starting making the right financial decisions for himself, rather than being given advice.

I'd even start by charging him rent/contribution to utilities etc. - this will help him form the discipline that will serve him many many times in the future.

HedgehogRulez

Pension and savings for house deposit

masonic

Bigwheels1111 said:

Help to buy ISA is a no brainer unless you live in London.

https://www.gov.uk/help-to-buy-isa

The first sentence in the link you posted:

"You can no longer open a Help to Buy ISA"

A Lifetime ISA is certainly worth considering... if he is committed to buying a home within the scheme rules. Can be started with £1, as it needs to be open for at least a year before it can be used towards a first time property purchase. See https://www.moneysavingexpert.com/savings/lifetime-isas/

kimwp

A good place for him to start is to consider living as though he pays rent, bills, whatever else he would pay for eg food and also saves. Anything he pays to you comes off this number obviously. Then that number gets put into savings and he has the rest to spend. That puts him in a good position of having savings and also not finding it a struggle to cut back when he moves out. 

bobfredbob

One piece of advice is that with pay rises, don't let his expenses/lifestyle expand to consume the whole pay rise.   I'd also just reaffirm that (unpaid) credit cards and loans can quickly eat up your spare money.

I once read about parents who made their child pay rent/food, but actually put all of that money aside to give them as a surprise when they moved out.

It seems like he's earning and saving well.  Personally, I would advice him to open a "Trading 212" Stocks ISA account (Stocks and Shares) and tell him to pay 10/20 pounds per month in to "VWRP" (Vanguard FTSE All World).  It's a basic investment that is popular and well known.  It basically puts a bit of cash in to thousands of companies all around the world.  It's a free account (no fees), so a bit like a saving account, but returns can go up and down so he may lose money over some months, but over many months and years its value should increase.  

By doing a little every month, that he hopefully won't miss, then it would build up confidence in investing later in life and he would usually make a profit over 5/10 years, and that confidence would help him with planning his pensions, etc.   It helps to demystify the whole stock market investment that for most people is just something some rich people do.
  
Just make sure you open "Stocks ISA" (which is tax-free) and not "Invest" (which requires paperwork and tax).
 

MX5huggy

Is he getting his pension contributions that are due to him (ie not opted out?). This is free money. He should look at the funds the pension is invested in they are probably to cautious for a 22 year old 40 plus years from retirement. 

kempiejon

22 years old with £2k per month disposable income what a time to be alive.

Alternative version, join works pensions, each month divide the income into pots, like a third to housing, a third living expense, the final third split between indulgences and the future. I saw another idea of 50% needs, 30% wants, 20% savings/debts.
If they're living in a parent subsdised arrangement those ratio are a more realistic guide. He could be saving over half his take home for the future. A millionaire by 50.
I'll pick option 1 please.