First of all, giving your son some independence, pointing him in the right direction in how to manage his own finances was brilliant. It's important for all young people to learn that money doesn't grow on trees
However, and please don't think I'm siding with Dad here, I'm really not, prior to him reaching 16 his DLA I presume was kept by you to provide for his care, and you were under no obligation to do what you ultimately did...
Dad is under no obligation to continue what you started IYGWIM
(morally I do think he's wrong, on sooo many levels)
My ex gave our 8yr old DD a mobile for her birthday, she didn't ask for it, didn't need it - she never went anywhere without an adult, and I knew the only reason he got it was to try and interfere with my life as much as possible (pee me off)
When she called me, on her new phone, to let me know what Daddy had got her for her birthday, I showed all the usual enthusiasm I would for her prezzies, and at the same time pointed out it would be staying AT Daddy's (nicely of course)
Daddy came on the phone demanding to know why she couldn't bring it home, so I told him all the reasons above, and pointed out to him that what goes on his house is up to him, what goes on in mine is up to me! Your house, your rules, my house, my rules.
Years later, when DS reached 8 he was so excited coz he'd be getting a mobile phone from Daddy - Daddy on the other hand was huffing and puffing about what does an 8 year old need a mobile phone for - I had the greatest of pleasure pointing out that was exactly what I thought about DD's, and as he'd got it for one he had to get it for the other
but I only got her one to pee you off, yes I know, which is why she wasn't allowed to bring it home
You say at the start of your post, you and DS had a massive row and that ended with him wanting to live with his dad - did your son think the grass would be greener over there and is now realising it isn't?
No I don't think Dad is right, as a result of DS moving in he is now receiving more benefits which I'm sure would be in excess of what his rent rise would be, however, his house, his rules, regardless of whether you agree with them or not.
Hope your son is able to put his point across - maybe with your help
Alternatively, your son may decide that living with mum ain't so bad after all
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