Make financial provisions
Building savings for kids: why it’s worth it and how it works
10/10/2022 at 7:46 a.m
Take out a home loan and savings contract for children? It sounds unusual at first. But if you want to invest money for your offspring, you should shortlist building savings.
Build a house, buy an apartment, renovate your own four walls – anyone who signs a home savings contract wants to put money aside for their own or future property. Because if you save a certain amount, you also get a cheap loan from the building company. But is this form of investment for children at all? Who knows if the offspring will later build or buy?
Provisions: This is why a home loan and savings contract for children is worth it
First of all, saving in society is a good way to provide for the future – for yourself and for your children. Anyone who starts investing money for their children at an early age can create a lavish financial cushion over the years until they reach adulthood. In addition to construction savings, there are of course many other forms of investment, but a construction savings contract is above all one thing: safe. The deposited money is kept and becomes more due to credit interest. Especially in turbulent times, many investors want precisely this security.
Young savers often even get a higher interest rate, but also benefit from other benefits such as a youth bonus and the elimination of account management costs. In addition, parents, grandparents, sponsors and friends can put money into the home savings account at any time and thus help the young saver to reach their savings goals faster.
Special Bonuses: This provides building savings for children
Building savings are a safe investment. The amount paid bears interest at a fixed rate, albeit at a low level at the moment. Bauspar savers find the loan option much more attractive: As soon as the contract is signed, you know what amount you can borrow and at what interest rate. This also meets many people’s security needs to a great extent. There are additional benefits, especially for young savers, if they themselves or their guardians sign the contract up to a certain age. The provider Schwäbisch Hall attracts with the following bonuses:
- Youth bonus: If you are not more than 22 years old when you sign the contract, you will receive a one-off payment of 200 euros to the construction savings account.
- Interest plus: In the FuchsStart home savings rate, there is a 0.25 percent credit interest – instead of the usual 0.1 percent.
- No annual fee: For young contract holders up to the age of 22, there are no account administration fees when entering into a housing savings contract in the FuchsStart tariff.
- Free purposes: Anyone under the age of 25 who takes out a home savings contract is free to decide what they want to use it for.
- Safe State Bonuses: At the age of 16, home savers can benefit from the housing premium, which means that the state gives them up to 70 euros per year.
Purpose: No money should go into real estate
Housing savings contracts are basically subject to a so-called residential purpose. This means that the money, including any bonuses, may only be invested in the construction, purchase or renovation/renovation of housing. It is different if you sign the contract before you turn 25. Then the savings are not subject to a fixed purpose. Are you studying for a semester abroad or buying your first car? The young saver decides freely.
Housing subsidy: The state also saves
Anyone who is 16 years old and the owner of a home loan and savings contract can apply for housing. This gives you an extra amount from the state for your own savings. The application can always be made for the past two calendar years – i.e. also with retroactive effect.
The size of the housing premium is 10 percent of the annual savings. However, at 70 euros for singles, it’s over. If you pay more than 700 euros per year, you will no longer receive housing bonus. The income limits to which the housing premium is paid at all must be observed. For singles, these are for a taxable income of 35,000 euros per year. Since most young people – even if they are in education – do not exceed this amount, they are entitled to the housing premium.
Conclusion: Register earlier and save longer
If parents take out a home loan and savings contract for their child at a young age, they will build up a nice sum over the years, which will later make it easier for their offspring to start adulthood. The money is always invested safely and even earns interest. Bonuses and premiums from construction companies and the state are particularly attractive to young contract holders. This adds another nice plus to the building savings account.
Alternative: Uncomplicated call money with good interest rates
If you simply want to save money for your children without having to worry about intended uses, government subsidies and the like, you can use a savings account. The money is also safely invested there and you can access it at any time. The days of really high credit interest rates are long gone, even with overnight stays. The 0.9 percent that Bigbank currently offers is, however, significantly more attractive than the above-mentioned interest rates.