Jasmine Birtles is answering questions from GBN members in the pensions and retirement Q&A. Email your query to money@gbnews.uk.
Question: Hi. I want to pay for my grandson's living expenses whilst he is at university. What is the best way to do this?
"Should I pay for his accommodation through my own account or pay the amount to his account?"
Jasmine replies: If it were me, I would pay for the accommodation directly rather than give the money to the grandson to do it.
This is basically to make it all more straightforward. If you give him the money and he then pays it, there’s always the possibility that the money could be confused as income.
It’s not of course, as it’s a gift from you, but if it’s seen to come into his account regularly, it can be a nuisance to explain it away to the taxman.
Also, although I’m sure that your grandson is a stand-up guy and will prioritise his bills over his entertainment needs, there’s also the outside chance that he will use the money for beer rather than paying his rent!
A grandparent wants to contribute to their grandson's living costs while he's at university
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Having said that though, if you have given him training in budgeting and working out the priority bills over the not-so-essential expenses, then having all the money in his account that he needs to manage himself could be a good way for him to learn budgeting by doing.
The more budgeting and saving experience that young people get, the better for their future wealth.
Lee Murphy, managing director of The Accountancy Partnership, says: “This is very generous of you!
"The pressures on university students are growing because of rising costs in most financial areas and helping to lift this burden will hopefully free up your grandson’s time and mind to be able to commit himself to gaining a high-level qualification.
“If you want to pay for his accommodation, it would be worth speaking to him and his accommodation provider to find out how his rent fees are paid.
"Often, you can pay for them in full or in instalments. There may be other options, too.
"Then, you can arrange with the provider the best way to pay for his accommodation through your own account.
“If you trust your grandson will pay his rent after you gift him the money for his accommodation fees then you can, of course, pay it into his account.
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Paying the money directly to the accommodation provider to cover the rent could be "straightforward", Jasmine suggested
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"This is a wonderful thing to be able to do and I hope your grandson appreciates what you’re doing to help him reach his goals."
“However, it seems like the best way to ensure a harmonious transaction between you, your grandson and the accommodation provider, is to pay directly to them.
"That way you have complete peace of mind that your grandson’s living expenses are paid for and he will be able to concentrate fully on his essays and passing exams.”
Jasmine Birtles is a personal finance expert, TV and radio presenter and author of 38 books.
Her website, MoneyMagpie.com, covers all aspects of personal finance from money-saving and money-making ideas to investment and pensions information. She is a keynote speaker at conferences around the world.
