Saving Money for Child: Best Account & Tips

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saving money for a child

Do you want to save money for a child?

It does not matter whether it is a child of age or minor, baby or grandchild.

There are special children's savings accounts with specific conditions that suit every situation.

Silver fleet, youth account, youth savings and so on.

We give you tips on which you can best open.

In this article:

The highest interest

You probably thought of this yourself, but always try to go for the best interest. So the highest. But please note that higher percentages often also involve additional conditions . For example, you get more return if you put the money in place, have to pay your withdrawal fines or if you choose a type of savings that is not covered by the deposit guarantee scheme. More information about this below.

In the table below you will always find the highest interest rates live at the moment. Click through to 'all savings interest' to be able to make a more extensive comparison for specific savings accounts for children. You can then open the account directly online if you wish.

How much to save for a child?

We often hear this question, but the answer is not unequivocal. It's good to put money aside for children anyway, let's put that first. Which number you set as a goal depends entirely on what you want to pay with it . A driver's license? Then $ 2000 to $ 2500 is sufficient. Do you also want to be able to pay for a full study? Then you must do this amount at least x 4.

In any case, it is always advisable to start saving in time, because the interest will automatically increase the money. However, please note that from a certain amount you can no longer just give money to your child without the Tax Authorities also wanting to get a piece of the pie.

Donate tax-free

If you do not have a specific goal but just want to give your offspring financial support on their 18th birthday or perhaps later when they get married or buy a house, you can decide the target amount yourself. Do take into account the fact that you can 'only' donate ommena at $ 5,428 per year tax-free . You can jump out of the band once and even give up to about 25 thousand (2019). Is it specific to a home for sale? Then you can even donate more than a ton ($ 100,000) without taxes.

When to pay out?

Think about when you want to have the saved money paid out. This of course depends on your goal and the age of your child. And maybe even how good he or she is with money. Giving an 18-year-old direct responsibility for an amount of thousands of euros may not be an equally good idea for every teenager. You want something useful to be done with it. The moment of payment also determines which type of savings you can choose, because you could lock the money for a while.

Whether or not to lock?

Saving for a child usually only means having to do something with the money in several years , especially if you start on time. And so it is a good option to secure the savings. This means that you can no longer access it temporarily, but on the other hand, you will also receive a higher interest rate .

By the way, you can secure money in a deposit and can simply go to the bank, under the Dutch guarantee system. The term is often several to decades. The longer the term, the greater the interest benefit.

It does not have to be that you cannot access the money at all during the term, but then you often pay a fine to withdraw the money. That is a shame, but that way you can at least deal with any emergency situations.

Savings insurance wise?

Beware of savings insurance. This is not an invoice, but really insurance. You usually get the highest interest here, considerably higher even, but the conditions are completely different. For example, you usually cannot withdraw prematurely, and the main disadvantage is that you will lose the money in the event of death. Then the insurer will not pay out anything. By the way, you can buy insurance in return to take that risk away. We are not saying that you should avoid this form, but read the conditions carefully.

Saving in the name of a child or in the name of parents?

You can open an account for your own child in her / his name, or in your name (of the parents). There are quite a few differences in the possible consequences that you should keep an eye on. NB: since 2012 it no longer matters for wealth tax, savings of underage children always count towards the parents' assets. You can find the differences that are still there below.

In your name:

  • You can decide for yourself when you release the money for your child to do something with it.
  • The moment you transfer the money to your child, this counts as a gift. This is more likely to cost tax compared to an account in your child's name.
  • When the parents die, the money falls into the inheritance and your child must pay inheritance tax on it.
  • If you go bankrupt, the money will fall into the bankruptcy inventory.

In the name of your child:

  • Your child will automatically have access to the money from the 18th birthday. Until then, you as a legal guardian still have to approve what will happen with the money.
  • You can avoid a large part of the gift tax because you spread the gift over several years.
  • There is no inheritance tax to be paid if you die.
  • In the event of a divorce, both parents / guardians have access to the money until the child is 18.