Saving for your children’s future

We all know that the sooner we start saving for our childrens’ third level education, the more we’ll be able to help them on their way when the big day comes to start college.

Setting up a college fund savings account at this time of year can get pushed aside until it’s all but forgotten.

We all want to give our children the best possible start in life and a good education is a top priority. However, this can be a lot more costly than you might realise.
The cost of putting just one child through school and college can easily run into tens of thousands of euro. If you have two or more children, well.. enough said.

Just €50 per month, excluding interest, will add up to €7, 200 in 12 years. €100 a month, without interest, will add up to €14, 400 over 12 years. Now imagine what that can do with 2% interest or higher?
The best accounts for this kind of saving are Regular Saver accounts. They are available from most banks and they are designed specifically to help make regular saving over the long term easy. Since we are currently in a negative rate interest environment, we also recommend broadening your horizons.
Where interest rates have been falling steadily, certain life companies have regular easy access savings bonds. This means that you can save €75 a month and instead your money sitting in an account with ineligible interest, it may earn potentially high rates, between 2%-6%.
We’ll take a look at the best regular saver accounts currently available in the Irish market and see which ones really match up to the task of saving for college.
 

Savings Accounts

Zurich Easy Access Savings Plan (Recommended) 
Over the last number of year Ireland has enjoyed historically low interest rates. Great for tracker mortgages, but not so much for deposit savers. The great things about this alternative is that you can choose where your money is invested and how much risk you want to take.
Customers must deposit between €75 and €500 per month to maintain the interest rate and may access the money at any time. Another massive advantage is that you can save up to €75, 000, unlike most savings bank accounts capped at €12, 000 (not ideal for 4-5 years of college education).
This is a great one for longer term savings and Zurich can tailor the plan to your needs. So, for example if you were feeling adventurous, you could go for a high risk/reward. Now I’d imagine for children’s savings, stability is key and this provides you with the option of a better return and stability as well.
We’re also offering an extra 1% bonus for anyone who opens this account with us.
KBC Regular Saver Account – 1.50% AER (Variable) + 1% Bonus
KBC have become known for offering strong rates of interest across their account range of savings products, and this account is no different. KBC also offers a generous maximum balance of €50,000 which should be able to hold the college funds of even the flushest kids.
Customers must deposit between €100 and €1,000 per month to maintain the interest rate. They also allow a maximum of two monthly payment breaks in each calendar year and may withdraw funds on demand.
PS: If you have a KCB current account you can avail of the Extra Regular Saver Account with 3.5% AER.
Nationwide UK (Ireland) Regular Saving Account – 2.50% AER (Variable)
Minimum €100 p.m. up to €1000 p.m. over 15 months with Nationwide UK. Interest rate is Best @ 3% p.a. (3.77% over 15 months) with 2 free withdrawals.
You can then take lump sum and put it into another account and start saving again. It’s worth taking advantage of high interest rates, where you can.
EBS Family Savings Account – 3.0% AER
The EBS slogan is “Where Family Counts” so it is fitting that their regular saver account is called the Family Savings Account. EBS offers a good rate of interest too which will attract consumers. However, with a low €12,000 maximum deposit amount it may not suit parents saving larger amounts of money.
The interest rate is fixed for the duration of the initial 12 month period. A 3% interest rate is very generous and this account is one of the highest available in the market for regular savings.
In addition to your monthly lodgement, you can also make additional lump sum lodgements up to an annual value of €50,000 from year 2 onwards.
 

Tips

Starting to save your child benefit when your child is born rather than when your child starts school could earn mean an extra €14,000 in savings. We’re all guilty of spending it on other items, but look at it as a gift towards your child’s future.
Be aware that many regular saver accounts have low maximum deposit amounts. €12,000 is common across AIB, Bank of Ireland, EBS and Ireland State Savings so if you’re planning to save more than €85 per month, you should look into a bank with a higher limit.
 

Draw up a budget

A good place to start is with a list of your earnings and outgoings. This will help you to see what you are spending, and show you how much – if anything – you have left once all your bills and other payments have gone out.
It should also help you to assess whether you can make any cutbacks. You might, for example, decide to ditch your gym membership or reduce the amount you spend on your weekly food shop by buying fewer branded products.
 

Find an account that suits you

Once you’ve set your target, you’ll need to find the right account for your savings.
If you want to be more disciplined with your saving, we highly recommend a regular saver account.
It’s also a good idea to put some money in an easy access account as this type of account allows you to get your hands on your cash whenever you need it which could prove vital in an emergency.
 

Set up a monthly direct debit

Once you’ve opened your savings account, an easy way to ensure you pay in to it each month is to set up a monthly direct debit from your current account.
It’s a good idea to do this just after you’ve been paid so the money goes out straightaway and you are not tempted to spend it on something else.
 

Conclusion

Saving for your deposit may seem like a daunting task, but with our advisors’ help, you can work out a saving plan that suits you.
Start by completing a budget of your weekly outgoings to identify any savings you can make. From there, work out what you can realistically manage to save.
Opening a new savings account is simple and straightforward and you can start your application through Alpha Wealth for most accounts. We are required to verify the identity of a new account holder so copies of your personal identification may be required. A copy of your driver’s license or passport will generally be accepted.
You may also need to provide proof of address, which can usually be done with a utility bill, insurance statement or any document issued by the revenue commissioners.
So, what are you waiting for? Contact us now and get saving! CLICK HERE.