Financial education for a teenager

gpman

https://forums.moneysavingexpert.com/discussion/comment/82106050#Comment_82106050

My advice to him at this stage would be simple:

'Think carefully, you can only spend a pound once.'

He's a big boy now, almost an adult, and is obviously smart to have gained a place at further education college.

Encourage him to think carefully about what he wants to do with the money when he turns 18, or indeed if he has any immediate plans. At 18, he may not know what to do. He may like the idea of having a nest egg available to fall back on in future if necessary. Remind him you are always available to listen to him and willing to share your more mature thoughts and guidance, if he feels he needs help.

But at 18, it'll be his money and sometimes learning from his own mistakes maybe the best way for him to learn.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82106800#Comment_82106800

Normally you would split such a large sum into savings for the short term, investments for the long term etc.

Maybe the 18 year old would be happy with a sum of money in a savings account that they could easily access and spend on what they want ( hopefully not going too mad) . Whilst at the same time agreeing with parents to invest some for the longer term and/or put it in inaccessible fixed term savings accounts for say 3, 5 and 7 years.

jaypers

Encourage him to split it into pots, with some that he won’t touch (maybe investment S&S ISA) right up to an amount he can just enjoy. This way it’s in advance rather than it just being frittered away, which can happen quickly and easily on that amount.

gpman

https://forums.moneysavingexpert.com/discussion/comment/82107012#Comment_82107012

Personally, I wouldn't. I would do exactly what I posted.

That's not to say I wouldn't offer such advice to my grandson to take when he turns 18, but it's his money and he can do what he wants with it once he is 18. If a trustee invests some of it in long term assets now that cannot be easily or cheaply liquidated by next year when the grandson turns 18, then they risk getting into deep trouble if the grandson demands its full cash value on his 18th birthday.

kermchem

Thanks to "gifts from excess income" from grandma, reinvesting dividends, and stock-market growth, one of my children turned 18 with about £60K in their child trust fund / ISA. Older sibling did not get a CTF so grandma funded a children's investment account in bare trust, again about £60K at 18. Each is now close to £100K.

I assume that the OP's grandson was left £100K as a minor in the will of a relative, and the trustees have invested this to produce growth for the grandson's benefit at 18. On his 18th birthday NOTHING will change, the £200K will be in the same building society account or general investment account, but grandson can access it without the trustee being involved. I think the first conversation is between grandson and trustee to understand how the money has been saved / invested, and how it will therefore still be saved / invested the day after his birthday. I trust that the grandson's best financial guide is his trustee.

I hope that as a long-term trust the money has been in stocks and shares, and not in a building society account, but next steps might differ depending on which.

While "in trust" this money has benefitted from grandson's tax allowances, but as an 18 year old, perhaps with a job, this £200K could produce enough interest to use most of his personal allowance, and certainly mean that HMRC will ask for a self-assessment return if interest is over £10K a year.

I think the money needs to be moved to tax-free shelters. As a 17 year old, both junior ISA and adult ISA could be opened and both fully funded. Same to adult ISA next year. It took me and older child three tax years to empty their GIA into an ISA avoiding CGT (smaller allowance now) and using full ISA allowance.

Yes, OP's grandson could blow the lot on a Ferrari, or half on the car and the rest on the insurance, but best to give him some money to play with, and keep the rest invested. It should be a house deposit. Of my kids and their cousins, one has blown the lot and more on a flat deposit, two are still sitting on ISAs, and one has moved some each year to a LISA and played the market with a small portion - bought Invidia and sold for 3x the price, bought SpaceX and got out.

Will grandson go to university? Borrow fees and maintenance, or use his trust fund? Mine kept their trust funds.

Sources of information - the websites of HL and AJBell have investment guides. Register at local library and get online access to sensible newspapers. Ask grandparent and get them to post questions here.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82107192#Comment_82107192

 If a trustee invests some of it in long term assets now that cannot be easily or cheaply liquidated by next year when the grandson turns 18, then they risk getting into deep trouble if the grandson demands its full cash value on his 18th birthda

I said clearly in my post that it would have to be in agreement with the grandson.

Whilst at the same time agreeing with parents to invest some for the longer term and/or put it in inaccessible fixed term savings accounts for say 3, 5 and 7 years.

gpman

https://forums.moneysavingexpert.com/discussion/comment/82107867#Comment_82107867

What I was attempting to convey was the danger of doing this. The trustee is ultimately responsible for the bare trust until the recipient is 18 years old. I don't think as a minor aged 17, he has capacity to give legal approval to what the trustee does.

Once he turns 18, he can then do whatever he wants with his money.

Yorkie1

https://www.moneysavingexpert.com/family/financial-education/

https://www.moneysavingexpert.com/martins-financial-videos/

Tommaso46

Impress on him how lucky he is to get all this cash without ever having done anything to deserve it. Tell him there are others his age who in a whole lifetime of struggle will never see that much money. Then explain how important it is to use it for a good purpose.

Albermarle

Then explain how important it is to use most of it for a good purpose and have fun with the rest.

The OP will have to sell the idea of not spending it all at once to his son, so will have to not make it sound too boring.