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  • FIRST POST
    • katie4
    • By katie4 3rd Sep 19, 1:18 PM
    • 303Posts
    • 150Thanks
    katie4
    Kids Pay Rent We Save it for them?
    • #1
    • 3rd Sep 19, 1:18 PM
    Kids Pay Rent We Save it for them? 3rd Sep 19 at 1:18 PM
    there isn't really a question here just sharing a thought i had. Growing up I remember when i got my first job and my parents telling me I'd have to pay rent i thought they were joking at first but nooo.


    Anyway it made me think as a 32 year old we really struggled to save a deposit for our own home and i'd hate for my children to struggle the way we did.


    I don't want to hand them anything on a plate but i thought when they are old enough (they're only 5 & 6 atm) and get their own jobs that i too would charge them rent, say £100 pm for example and then put this into a savings account (in my name) then when they're old enough / responsible etc i would then give them their money back that i had in essence been looking after for them so they would have it for a deposit (or any other reason they may need it for)

Page 1
    • Rheumatoid
    • By Rheumatoid 3rd Sep 19, 1:46 PM
    • 544 Posts
    • 1,321 Thanks
    Rheumatoid
    • #2
    • 3rd Sep 19, 1:46 PM
    • #2
    • 3rd Sep 19, 1:46 PM
    there isn't really a question here just sharing a thought i had. Growing up I remember when i got my first job and my parents telling me I'd have to pay rent i thought they were joking at first but nooo.


    Anyway it made me think as a 32 year old we really struggled to save a deposit for our own home and i'd hate for my children to struggle the way we did.


    I don't want to hand them anything on a plate but i thought when they are old enough (they're only 5 & 6 atm) and get their own jobs that i too would charge them rent, say £100 pm for example and then put this into a savings account (in my name) then when they're old enough / responsible etc i would then give them their money back that i had in essence been looking after for them so they would have it for a deposit (or any other reason they may need it for)
    Originally posted by katie4
    We did that for our son and have just given it back to him as he has moved out into rented accommodation. We did stipulate, and he agreed, that it should be fed in to a LISA until he wants to buy.
    16 Panel (250W JASolar) 4kWp, facing 170 degrees, 40 degree slope, Solis Inverter, Geo Solo II Monitor. Installed 29/9/2015 - £4700 (Norfolk Solar Together Scheme)
    Year target (PVGIS-CMSAF) = 3880kWh - Installer estimate 3452 kWh:
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    • xylophone
    • By xylophone 3rd Sep 19, 1:52 PM
    • 30,965 Posts
    • 19,134 Thanks
    xylophone
    • #3
    • 3rd Sep 19, 1:52 PM
    • #3
    • 3rd Sep 19, 1:52 PM
    If the LISA is still around when your children reach 18 and they are working and living at home, you might tell them that you will not charge them rent on condition that they open a LISA and pay in the maximum possible each month?
    • Malthusian
    • By Malthusian 3rd Sep 19, 1:55 PM
    • 6,573 Posts
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    Malthusian
    • #4
    • 3rd Sep 19, 1:55 PM
    • #4
    • 3rd Sep 19, 1:55 PM
    What if they call your bluff and move out?

    A better option would be to help them save the money in their own name and invest it sensibly for the day they want to buy a house. You don't have to wait for them to "become financially responsible" by magic, you're their mother. Unless they go totally off the rails and refuse to be influenced, but then you can't help them whatever you do.

    How are they supposed to become financially responsible if they aren't allowed to control their money? Handling money is like any skill, it requires practical experience. You don't teach a teenager to drive by driving them everywhere until they're 25 and then telling them that now they're old enough they can drive on the M1.

    If you charge your kids rent as adults then it will be taxable as income. Plus they will have tenancy rights and you will need to comply with your responsibilities as a landlord. Yes you could do it "under the table", pretend the money is a gift and hope that your kids won't dob you in, but the same is true if you were charging rent to a stranger, it doesn't mean it's a good idea. Plus it's Inheritance Tax inefficient if you are over the threshold and your kids are your heirs.
    • sal_III
    • By sal_III 3rd Sep 19, 2:30 PM
    • 1,222 Posts
    • 1,172 Thanks
    sal_III
    • #5
    • 3rd Sep 19, 2:30 PM
    • #5
    • 3rd Sep 19, 2:30 PM
    So at what age do you expect them to become financially responsible, if they are able to work, yet still not responsible this points you expect it to be quite late in their lives. How are they going to learn it if you keep their savings in your name?

    Much more sensible would be to gauge their income and set them a savings goals, then reward them for achieving them - like the Gov bonus for LISA etc. If you want to drive them out, so you can finally have some peace and quiet with the missus, there are better methods than charging them rent

    I know that times has changed and today's teenagers are not like yesterday's teenagers, but I will nevertheless try to do with my boys (2 and 6) what my parents did with me 20+ years ago - teach me financial responsibility by the age of 18.

    This way they didn't have to charge me rent or hold money in their name until I become "responsible"
    • cloud_dog
    • By cloud_dog 3rd Sep 19, 2:54 PM
    • 4,479 Posts
    • 2,785 Thanks
    cloud_dog
    • #6
    • 3rd Sep 19, 2:54 PM
    • #6
    • 3rd Sep 19, 2:54 PM
    Growing up it was always understood that once we started a permanent job we would contribute to our household. 20% of your take home was the going rate then, and it is something I am instilling in my DD, preparing her so to speak.

    I'm sure most of my contributions came back to me in one way or another and I'm sure much the same will happen with my DD.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • cloud_dog
    • By cloud_dog 3rd Sep 19, 3:00 PM
    • 4,479 Posts
    • 2,785 Thanks
    cloud_dog
    • #7
    • 3rd Sep 19, 3:00 PM
    • #7
    • 3rd Sep 19, 3:00 PM
    Katie....answering your question (for a change), I would probably consider adding money in to the LISA. Perhaps offer to contribute whatever amount they contribute.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • Dorian1958
    • By Dorian1958 3rd Sep 19, 3:11 PM
    • 207 Posts
    • 173 Thanks
    Dorian1958
    • #8
    • 3rd Sep 19, 3:11 PM
    • #8
    • 3rd Sep 19, 3:11 PM
    Both MrsDorian and I paid "board" (in my case 30% of take home pay), that was the culture of the time where I grew up. I did not begrudge it because I knew what to expect. Unknown to her, MrsDorian's parents saved it and handed it over as a wedding present, a very nice surprise. Different times I suppose, these days contributing to a Lisa is much more mse. I doubt it would be taxable in any case, rent a room scheme?
    • MaxiRobriguez
    • By MaxiRobriguez 3rd Sep 19, 4:28 PM
    • 411 Posts
    • 288 Thanks
    MaxiRobriguez
    • #9
    • 3rd Sep 19, 4:28 PM
    • #9
    • 3rd Sep 19, 4:28 PM
    If you can afford £100 a month each for them both, and start drip feeding that into a S+S ISA, you should have at least £20k for them both by the time they're 18.

    You can gift them this as a deposit and ask them to pay it back over a few years.
    • DairyQueen
    • By DairyQueen 3rd Sep 19, 8:22 PM
    • 879 Posts
    • 1,617 Thanks
    DairyQueen
    Gobsmacked. Working adults whose parents do not expect them to contribute to their living costs? Perhaps explains why parents are lumbered with their adult kids for decades.

    How does relieving adult kids of necessary costs teach them financial responsibility?
    • iglad
    • By iglad 3rd Sep 19, 8:44 PM
    • 162 Posts
    • 49 Thanks
    iglad
    there isn't really a question here just sharing a thought i had. Growing up I remember when i got my first job and my parents telling me I'd have to pay rent i thought they were joking at first but nooo.


    Anyway it made me think as a 32 year old we really struggled to save a deposit for our own home and i'd hate for my children to struggle the way we did.


    I don't want to hand them anything on a plate but i thought when they are old enough (they're only 5 & 6 atm) and get their own jobs that i too would charge them rent, say £100 pm for example and then put this into a savings account (in my name) then when they're old enough / responsible etc i would then give them their money back that i had in essence been looking after for them so they would have it for a deposit (or any other reason they may need it for)
    Originally posted by katie4
    Thats what my mum did with my brother and I when wee both started working and were still at home.

    She basically put our rent money into a building society and helped with a deposit on our first houses.

    She never actually told us what she was doing so it came a s a welcome surprise.

    The key to it all is not to tell them about it.
    Last edited by iglad; 04-09-2019 at 11:17 PM.
    • KeepOnKnitting
    • By KeepOnKnitting 3rd Sep 19, 8:52 PM
    • 258 Posts
    • 488 Thanks
    KeepOnKnitting
    Or you could teach them real financial responsibility and charge them board. Full stop. No returns.

    They can have it back as inheritance if you don't manage to spend it on Caribbean holidays by then.
    Save £12k in 2019 #43
    • atush
    • By atush 3rd Sep 19, 9:26 PM
    • 17,876 Posts
    • 11,360 Thanks
    atush
    Charging your children 'rent' is a Good thing.

    As the rent (i charged 50/week) is far far less than them renting an apartment/flat or room in a house and paying all their costs incl food/utilities/ It breaks them in if you were, to the realities of life.

    Even if they are on a low wage, they can still save a large amount. Unless their lifestyles are out of control. In which case if you baby them by nor charging to allow them the latest phone and all sorts of going out, holidays etc then you are dong them no favors by impoverishing your retirement years to enable their overspending.
    • MadMat
    • By MadMat 4th Sep 19, 7:55 AM
    • 260 Posts
    • 122 Thanks
    MadMat
    Reading this is making me feel a little selfish, I've taken advantage of the fact that my 19 year old is finally contributing something towards his upkeep (nothing like the real cost of him still living at home) to divert a little more of my own income into my SIPP.

    Is that selfish - at £30 a week for bed and board when he's earning around £200 a week after tax it seems to me he's getting a pretty good deal!

    Mat
    • DairyQueen
    • By DairyQueen 4th Sep 19, 8:29 AM
    • 879 Posts
    • 1,617 Thanks
    DairyQueen
    Thats what my mum did with my brother and I when wee both started working and were still at home.

    She basically put our rent money into a building society and helped with a deposit on our first houses.

    She never actually told us what she was doing so it came a s a welcome surprise.

    The key to it all is not to tell them about it.
    Originally posted by iglad
    So, your mum effectively paid all of your living costs and decided that 'your' savings would be diverted toward a house deposit, and without any discussion.

    She treated you as a dependent child.

    She could, of course, have charged you zero on the condition that you saved the equivalent toward a house deposit. This would have required some consideration for your status as an adult. It would have required discussion and trust.

    I'm not sure how infantilising adult children is a template for encouraging financial responsibility and discipline, nor how it informs young adults about real world costs.
    • Malthusian
    • By Malthusian 4th Sep 19, 9:04 AM
    • 6,573 Posts
    • 10,677 Thanks
    Malthusian
    So, your mum effectively paid all of your living costs and decided that 'your' savings would be diverted toward a house deposit, and without any discussion.

    She treated you as a dependent child.
    Originally posted by DairyQueen
    Yeah, pretty much. If you came from someone's womb and live in their house at below market rent then you are their child and dependent on them. They always had the option of living somewhere else and saving as much of their now considerably lower disposable income for whatever they wanted.

    I can see why people go through this rigmarole but it seems a sub-optimal solution compared to raising a financially responsible child who is allowed to practise handling money from the age they are capable of it.

    It is the same school of thought that leads to people setting up Wills with pointless and legally invalid clauses about the heir only being allowed to spend their money at 25.

    It is true that far too many kids refuse to fly the nest for the sake of an easy life, but charging them below market rent isn't a solution. If you want rid of them you have to charge them market rates. A kid who has never lived independently will also struggle with the responsibilities of being a homeowner. If they refuse to leave the family home and start paying rent, then even if they do save up a deposit (in their own hands or yours) how are you going to get them to leave the family home and start paying a mortgage, plus all the other bills that come from owning your own property?
    • Mnd
    • By Mnd 4th Sep 19, 6:56 PM
    • 1,365 Posts
    • 2,092 Thanks
    Mnd
    The system my parents used was, no matter your wages. 33% was housekeeping 33% saving.33% spending. It worked fine. Taught us about money and built up a decent saved amount.
    • Thrugelmir
    • By Thrugelmir 4th Sep 19, 7:33 PM
    • 64,537 Posts
    • 57,030 Thanks
    Thrugelmir
    As soon as I got a paid job. My mother took 10% of my net standard wage as housekeeping. Seemed fair enough.

    Though unknown to me she did put part of it into a building society account. When I told her that I was looking into buying my first property. She disclosed the existance of the account and said to use it towards the deposit. Resulting in a smaller mortgage,
    Last edited by Thrugelmir; 04-09-2019 at 7:36 PM.
    “If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional volatility.”
    ― Niall Ferguson
    • schiff
    • By schiff 4th Sep 19, 9:06 PM
    • 18,656 Posts
    • 10,061 Thanks
    schiff
    It looks like I was the one to do it the other way round! I paid my keep at home, agreed with my mother; can't remember how much as it was a long long time ago! I had annual pay increments that I offered to share with my mother. Accepted for a couple of years but then I was told it wasn't needed. So I opened deposit accounts in the old Co-Operative Building Society (now Nationwide) for my mother and father with half the not needed money going each month to each of them. My mother still had the same account when she died at 83!
    • steampowered
    • By steampowered 5th Sep 19, 8:00 AM
    • 3,594 Posts
    • 3,711 Thanks
    steampowered
    Personally I would never charge my kids rent.

    I would much rather my kids learn financial responsibility by managing their money themselves, hopefully saving a big chunk of it.

    At that stage in their lives they need to be saving their money for uni, moving out or a house deposit.

    I might feel a bit differently though if my kids were very immature and I thought they'd spend it all on fast cars and girls.
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