17 November 2019
Is it still worth opening a savings account for your child?
Do you remember paying into your savings account every week? Or perhaps, when you turned 18, being pleasantly surprised to find that your parents had set aside a little nest egg for your first steps in adult life (driving licence, university)?
Now that you are a parent, you would probably like to do the same for your child. But with historically low interest rates, is it really worthwhile?
Some preconceived ideas and solutions available
"My low income means I can’t save for my child. "
Do you remember the fable of the hare and the tortoise? Slow and steady wins the race. It’s the same with saving, the sooner you start, the better. No one can predict what the interest rates will be in 5 to 10 years from now. But even if we take a very pessimistic rate, did you know that if you save 10 euros a month from the time your child is born until adulthood he or she will have 2,200 euros!
2,200 euros, which is enough to...
- cover the cost of obtaining a driving licence through a driving school twice over.
- set up their first apartment.
- pay for university tuition fees for 2 years.
- go on a trip with friends to Asia, Latin America, etc.
- buy their first used car.
By adding small gifts of money to this amount, such as holiday money, Christmas or birthday presents, first communion gifts or a good school report reward, you can easily double this amount.
"The interest rates on savings accounts for children are so low it's not worth saving."
Unlike a piggy bank, a savings account for a child is still a simple and safe way to put money aside.
- It's more secure: no one will be able to come and steal your money while you are away.
- More guaranteed: you are sure your child will not use the money to buy useless gadgets. For that, he or she will have pocket money after a certain age. It is important therefore not to confuse saving for your child's future with learning the value of money with his or her pocket money.
Is a savings account a way of teaching your child the value of money?
You may not have thought of it, but a savings account can also be a fantastic educational tool for teaching your child how to manage money.
There are indeed times (birthdays, Christmas, New Year's, end of school year, etc.) when your child may receive a lot of small gifts of money. But perhaps he or she is dreaming about something on a bigger scale. For example, a weekend at an amusement park, the latest bike or a game console.
If your child is of the appropriate age, he or she can tell grandparents, godfathers and godmothers about this project, and they will no doubt be delighted to contribute a modest amount to their savings account.
· The advantage for you: gone are the thousands of small monetary gifts piling up in the house.
· The advantage for your child: learns to set priorities. A great gift for the future.
An idea for teaching your child to achieve a savings objective
Your child can pick out the toys he or she no longer wants, sell them at a jumble sale and put the money back into his or her savings account.