Moneytrackworld – shared “rainy day” savings for relatives

  • This topic has 15 replies, 14 voices, and was last updated 3 months ago by  ji.
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  • Moneytrackworld – shared “rainy day” savings for relatives
  • Premier Icon deadkenny
    Subscriber

    Any thoughts on this? I’ve got an idea to set up some kind of rainy day fund that relatives such as parents & siblings can access for big bills if they’re stuck for money. Rather than they’re depending on expensive credit or just giving the cash direct which sounds a bit “charity”. Plus while I might have a bit of extra cash to help, others could add in if they feel like it, or not.

    One way is a joint savings account but then we’d be tying together credit scores.

    If I just have a savings account myself as the fund pot, anyone else contributing would count as income to me. If I pay out to someone, that’s income to them they’d have to declare. Not sure if just paying their bills though.

    Or what about a ‘go fund me’ type of thing? Can you do one of these that’s just a pot of money for anything or would it have to be lots of them specific to the thing they want funding?

    Just wondering what kind of thing would work best that isn’t going to hit much tax issues or put people at risk.

    scotroutes
    Member

    You are basically setting up an insurance company?

    I think you can gift relatives £3k PA , so unless they are going to set fire to their house that amount would cover alot of washing machines.
    Its a noble gesture , but it won’t end well , trust me.

    ctk
    Member

    Save money, if a family member gets in serious trouble bail them out. If you have loads of cash give some away. Setting up a fund might cause trouble.

    Its a noble gesture , but it won’t end well , trust me.

    Yep

    aweeshoe
    Member

    It’s an extremely thoughtful and benevolent thing to do. It was ideas like this which prompted Quakers to form the first banks, until the corporation act came into force changing them from family businesses who acted on morals to shareholders who chased profits.

    The last thing you want, I guess, is to cause arguments so don’t lend money you can’t afford to lose and either be strict on what circumstances people can use it for, or let it be accessed when needed or wanted without question.

    I don’t think GoFundMe will hold money for long after the campaign target has been reached but it would be worth emailing them. How about a credit union or charity?

    Premier Icon Kamakazie
    Subscriber

    Prepay debit card?
    PayPal account?

    Probably better off just saving yourself and gifting if required though.

    Premier Icon Greybeard
    Subscriber

    You don’t have to declare gifts as income, so that wouldn’t prevent you holding the pot, but I can see lots of other complications apart from family disputes. It would be regarded as your money for inheritance purposes and any benefit claims, for example. I think you’d need to set up a Trust. Maybe you could do it without actually moving the money, ie, if you or another have money available, just record the amount. But I think it will be trouble, however you do it. I’d just tell the family you might be able to help out if they’re struggling.

    Premier Icon FuzzyWuzzy
    Subscriber

    I get along with all my relatives but I still don’t think this is a good idea. People should take responsibility for themselves for starters and build up their own savings pot. If some disaster does strike that they can’t cover themselves then just ask relatives at the time for an interest free loan or something (or get a real loan). Having a joint fund is just as likely to start causing resentment between you all as it is to be helpful.

    What happens if some relatives blow £10k on the holiday of a lifetime (inc. all their savings) then have a problem a couple of months later requiring them to clear out the fund they haven’t actually paid much into but you have? If you’re happy with that then presumably you’d be happy to just give them money directly at the time anyway, and not sure why there should be any misgivings about it being charity – if they can’t deal with that stigma they should have planned their own finances better!

    mogrim
    Member

    What happens if some relatives blow £10k on the holiday of a lifetime (inc. all their savings) then have a problem a couple of months later requiring them to clear out the fund they haven’t actually paid much into but you have?

    Then another relative comes along 2 weeks later and needs money for a new washing machine. Or the relative that decides a new dishwasher is essential, while the rest of you think they should just put on a pair of Marigolds? It’s a nice idea but I think you’re setting yourself up for a whole world of pain.

    Premier Icon tomd
    Subscriber

    Encourage family members to start an account with a local credit union? They’re kind of meant to exist to encourage saving by those on lower incomes and provide access to affordable credit when needed (if you can show you can save a little).

    You could maybe match motributions or something.

    taxi25
    Member

    Encourage family members to start an account with a local credit union? 

    Deffinetly this, your plan as said is very thoughtful, but relative’s and money is a world of pain 🙁

    Premier Icon deadkenny
    Subscriber

    Thanks for all the responses. Does confirm what I was thinking in that this was more likely going to be a world of pain. It’s a case of when someone just has crap all income, shit happens and insurance isn’t going to cover it, and wouldn’t want to see them going to a loan shark. Or similar parents exhausting retirement funds and resorting to equity release or selling up the house.

    Plain gifting or as an interest free loan seems the easiest way then.

    kayla1
    Member

    You’ll have to ask them to keep it quiet or you’ll be getting tapped up for all kinds of spurious reasons and you’ll start to resent them. Your heart’s in the right place but people will just take the piss when ‘free’ money’s involved. I’m speaking from the experience of having tried to do a similar thing.

    Premier Icon jimdubleyou
    Subscriber

    Friends of ours have a family trust. Its basically run by the father of the 4 kids as a means to keep control over them.

    It’s not a great state of affairs tbh…

    ji
    Member

    I do this with my siblings to support our parents. Just a savings account that one of us holds, and we all agree when/if something needs to be covered (eg somehting towards a new (old) car, private NHS cataract operation to avoid 8 months waiting list etc). But we are talking pretty small amounts, well under the £3k mentioned above.

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