IT is shaping up to be a very happy new year for expectant parents, with one major lender announcing it will give $200 to every Australian baby born in 2017.
Westpac today unveiled its new “Bump” initiative, which aims to give newborns a head start on reaching a secure financial future.
The bank will celebrate its own 200th birthday this year by depositing $200 into new accounts for 2017’s babies, which parents can add to over the years, until the child can access the account at age 16.
The rollout is designed to help parents and grandparents start positive financial habits in their child right from birth.
Westpac Group’s consumer banking chief executive George Frazis said getting children onto a path of healthy savings can pay off significantly once they hit their teenage years.
“By building on an initial $200 deposit at birth with a $20 contribution every week, for example, it will potentially amass approximately $19,000 in savings (based on a 1.5 per cent interest rate) by the time the child turns 16,” he said.
“That’s a significant financial head start for any child and can be put towards future education, life experiences such as a gap year or a deposit on a first home.”
Close to 300,000 Australian babies are currently born each year, meaning the bank could give up to $60 million if there is full take-up from parents.
The bank’s experts predict a quarter of newborns will take up the offer, which is open to all Australian babies born this year, regardless of whether their parents are Westpac customers.
The accounts will operate much like a fixed term deposit. Parents will be able to withdraw any additional contributions they make to the account but the initial $200 deposit from Westpac can only be accessed when the child turns 16.
Parents of any child born from today can register their baby for a Bump account, however the $200 will be deposited on April 8, when Westpac marks its bicentenary.
Lorraine Donnelly, 28, and her husband Andrew, 32, are expecting their first child, a girl, in February and the pair plan to open up a kids’ bank account soon after.
“Opening a bank account for the baby a few months after she is born is something we plan on doing,’’ she said.
“I probably won’t put money away for her until she’s school age but any gifts from grandparents will make a savings account a good place to put those funds.
“I think the younger you start teaching children about money the better because you build the habit. My dad taught us to be frugal and when I was a teenager I applied what he taught us.”
A new survey commissioned by Westpac found 86 per cent of parents, grandparents and prospective parents believed opening a savings account for young children would set them up for success in later life.
The Westpac Financial Future Report found 66 per cent of parents were worried about how financially savvy their children would be by the time they finished high school.
“Setting up our future generations for success will help Australia to thrive,” Mr Frazis said. “Teaching children to save from an early age is known to have a positive impact on future financial stability.”
AMP financial planner Dianne Charman said ideally parents should open up a kids’ bank account soon after their child is born.
“I would encourage any parent with a newborn to open an account, it’s a good way to start because you often get given money for your child,’’ she said.
“Getting into good savings habits is good for the kids, I’ve got clients who have put $20 a week every week for their children and by the time they get to 15 or 16 they have a nice little nest egg.”
To register your interest for a Westpac Bump Savings account go to westpac.com.au/dearbump.