31st October 2023

A joyful arrival is on the horizon!

Mum can already feel the first kicks in her tummy and Dad is eager to know the baby's sex, while Grandma cannot wait to spoil the baby and Grandpa is bursting with pride. As you may have guessed, the family is preparing for a happy event this summer. That means the young, future parents are overwhelmed with questions to which they need answers so that they can make the necessary preparations.

Should we have a baby list?

They are wondering about a list because they have already been asked dozens of times since they announced the good news to their friends and family. Ultimately, Julie and Charel decided not to have a baby list because they both have nieces and nephews whose pram, baby carrier, changing table, nappy bag, clothing and more will be passed on to them. As for the rest, they plan to buy it second-hand as and when they’ll need it because the internet is certainly not lacking in adverts selling used baby supplies in great condition.

What they want most is for their baby to arrive in good health and for it to be able to enjoy the baby gifts received, rather than see them discarded when they are no longer needed.

Moreover, they believe it is wiser to give their baby a financial boost when it reaches adulthood. If they start saving money now, the amount accrued later will be larger, right? Although there is still plenty of time to think about it, prevention is better than cure!

Should we already open a savings account for the baby?

Grandpa is absolutely determined to open a savings account for his grandson or granddaughter because that is what he did when Julie was born. She was still a newborn when he opened an account for her and began making monthly deposits. On special occasions such as her christening, communion, birthdays and so on, Julie's family also paid money into her account ‒ "for later", as they said. Julie was not allowed to access her account until she turned 18 and the amount accrued at that point was relatively high. Indeed, the 18 years of savings her father set aside for her, in addition to the generous gifts from her family and the interest earned on them at the end of each year, meant that Julie easily had enough of a nest egg to obtain a mortgage.

Julie was not the only one with a forward-looking father; Charel and most of the children in their generation did as well. It was what people did in those days.

Savings accounts today

Without a doubt, modern savings accounts are quite different to the accounts a child might have had 30 years ago. There are two factors which explain this change:

1. Interest

As a good father with his child's future in mind, Charel asked his bank for information on the matter. The interest paid on savings accounts is currently not very attractive. He remembers seeing end-of-year statements where the amount of interest he had accumulated was EUR 500. Making money without doing a thing was not too bad!

However, that is all ancient history and certainly no longer the case. If he opened a savings account for his child today, the interest rate would be next to nothing, which means that, aside from the savings deposited in the account, the amount will hardly change at all.

2. Inflation

Hardly, because inflation also plays an important role. Currently, money that sits idle over the long term loses value. This means that if you have EUR 10.000 today, there is a risk that in 20 years, your EUR 10.000 will only be worth EUR 7.000.

This makes a really big difference when one thinks that, when Charel was a child, he earned EUR 500 in interest every year, while today, he would ultimately be losing purchasing power. That is inflation.

This example uses the inflation calculator, with savings of EUR 10.000 and an inflation rate of 2% over a period of 18 years. The result shows that, because of the 2% inflation, in 18 years EUR 14.000 will be needed to acquire what can be purchased today with EUR 10.000. In other words, the initial savings of EUR 10.000 will only be worth EUR 7.000.

Is there an alternative to a savings account?

Without hesitation: long-term investments! During his meeting at the bank, Charel picked up all the information he needed to help him start investing for his child. He now has an investment plan that enables him to invest his money over the long term in various categories of product, to limit his risk of loss. He opened an S-Invest plan for the baby and to welcome it into the world, his bank gave him EUR 50 to invest. Together, he and Julie will invest a set amount each month and, rather than lying dormant in a savings account, the money will grow in value.

The new parents do not have to lift a finger because once the standing order is set up, the bank invests in the most suitable funds for Charel. After all, the new parents will have their hands full when the baby arrives.

And what about Grandpa in all this?

Oh no! We forgot about Grandpa. Given that Charel already has an investment plan in mind, he will invite Grandpa to open a savings account. That way, Charel will handle the investment side and Grandpa will be able to enjoy sharing the baby's account number with friends and family so they can make a contribution to celebrate the birth. And on any subsequent significant occasions if they wish so. Furthermore, when the baby's savings account is opened, the bank will transfer a gift of EUR 50 right into the account.

And, if he likes, Grandpa can also take out lalux-Study Cover insurance for his grandchild and receive an additional EUR 50 to be credited against the cost of the insurance product. Not only will Grandpa enjoy providing for his grandchild's future, the baby will also hold all the financial products it needs to ensure its finances are optimally managed.

lalux-Study Cover Insurance

This is a life insurance product that allows you to build up savings to prepare for your children's future studies or simply to support them as they make their first steps into the working world. The contributions are due over the full term of the policy, even if one of the insured parents dies.

When the policy matures, the amount saved is paid out to the child in quarterly instalments over five years so it can pay for its studies.

When it comes to finances, the baby is covered! Plus, it also earned EUR 150 for free, thanks to the products taken out by its father and grandfather.

Have you started planning financially for your baby's arrival? Whether your child is already here or not yet born, it is never too late to revisit your choices about its future. Find all the information you need on our page or ask your bank for guidance 😉.

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