Three key takeaways:
1. Starting with a small, regular amount is often easier and more sustainable than waiting until you can save more.
2. A clear goal, automatic payments and gradually increasing the amount you save make it easier to build up your savings over the years.
3. A protection and savings solution can help you prepare for future plans while protecting your family financially if the unexpected happens.
Preparing for your child’s future does not necessarily require a large budget. Starting with €25 a month can be enough to build a lasting savings habit and gradually help fund their future plans: university, a driving licence, their first home, or travel. By setting a clear goal, automating your payments, and choosing a suitable solution, you can move forward step by step, at your own pace.
Why start saving now?
Higher education, a driving licence, time abroad, a first car, or moving into a home: the milestones that come with entering adult life can be expensive. While it is impossible to predict exactly what your child will need in ten, fifteen, or twenty years’ time, saving gradually can help you build up a lump sum to support their future plans.
Starting early makes it easier to spread your savings contributions over time. A small amount built into your monthly budget is usually easier to maintain than having to put aside a large amount at the last minute. For example, saving €20 a month means contributing €240 over a year. Over ten years, that amounts to €2,400.
A higher return potential than a traditional savings account
In addition to its protection and tax benefits, protect4life gives you access to a range of investment funds tailored to your risk profile. Depending on the investment options selected, your savings may benefit from a higher return potential than that offered by a traditional savings account. This approach allows your capital to grow progressively over the long term while maintaining the flexibility needed to support your future plans and goals.
Set a clear goal
Before putting money aside, take a moment to consider what you want to save for. Setting a goal gives your saving a clear purpose and helps you choose an appropriate savings timeframe.
A few questions can help you get started:
- At what age would you like the savings to be available?
- Which project would you most like to fund?
- How much can you save each month without putting your budget under strain?
- Would you like to combine your savings with protection for your family should something unexpected happen?
Your goal may change. The important thing is to set a starting point, then adjust it over the years in line with your priorities.
Automated payments to make saving easier
Saving regularly is one of the best ways to build up your savings over time. However, between bills, unexpected costs, holidays, and everyday purchases, it is not always easy to remember to put money aside every month.
Setting up an automatic payment turns your intention into a habit. A set amount is automatically transferred each month, ideally shortly after you receive your income. This means you save first, before your budget is taken up by everyday expenses.
Whether it is €25, €50, or €100, a regular automatic payment allows you to make steady progress without having to think about it every month.
Increase your savings gradually
Starting with €25 a month does not mean saving the same amount throughout the whole savings period. Your ability to put money aside can change over time: a pay rise, paying off a loan, lower outgoings, or receiving a bonus can all make a difference.
For example, you could review your savings once a year and increase your payment by €5 or €10 a month if your budget allows. This gradual increase can make a real difference over time.
Example: You set up a payment of €25 on the 5th of every month. After one year, you will have set aside €300. If you increase this amount by €10 a month the following year, you will save €420in the second year.
A one-off sum of money can also be an opportunity to top up your child’s savings: a bonus, tax refund, family gift, or thirteenth-month salary. However, make sure you maintain a balance between this goal, your day-to-day spending, and your own emergency savings.
Involve your child as they grow
Talking to your child about saving can help them gradually develop good money habits. The aim is not to make them responsible for their own financial future but to teach them some useful financial basics.
With a young child, you can simply explain that regularly putting aside a small amount can fund bigger projects later on. During their teenage years, you can help them learn to manage their money by showing them the difference between spending on a treat and saving for a bigger goal, and by encouraging them to put aside part of their pocket money to reach a specific goal.
Choose a savings solution for your child’s future
The choice of a savings solution depends on your plans, the timeframe, and your budget. For a short-term need, or if you want to keep funds readily available, a savings account may be suitable. If you are saving for a longer-term goal, for example, to support your child through higher education or the start of their working life, a protection and savings solution may be worth considering. The aim is to choose an option that fits your family’s priorities and your ability to save.
With protect4life, Foyer offers a protection and savings solution with regular premiums, available from €25 a month and designed for a minimum term of 10 years. It allows you to build up savings progressively while benefiting from life cover included in the policy, as well as, depending on the cover selected, additional protection in the event of disability.
The policy may include:
- A deferred lump sum, paid on a set date, for example, to help fund your child’s higher education or other major expenses as they start adult life.
- A death benefit, paid to the beneficiary of your choice in the event of death.
- A lump sum or annuity for children to help cover their day-to-day expenses until they turn 27, depending on the cover selected.
- A disability pension, intended to help protect your income if you are unable to work, in accordance with the terms set out in the policy.
Before taking out a policy, check the cover, fees, payment arrangements, investment options, and associated risks.
Saving €25 a month is a practical first step towards helping your child realise their future plans. With a realistic goal, automated payments and an amount you can adjust to suit your budget, a small amount can build up over the years and help fund your child’s future plans. A protection and savings solution such as protect4life can also allow you to combine saving with financial protection for your loved ones, depending on the cover selected.
Frequently asked questions
Is it worth saving just €25 a month for my child?
€25 a month may seem modest, but regular payments can gradually build up a lump sum. You can then increase the amount if your budget changes. Starting early is often easier than waiting until you can save a large amount.
How much should I save each month for my child?
There is no ideal amount that applies to every family. The amount you save should fit comfortably within your income and outgoings while allowing you to maintain your own emergency fund. Saving a modest, realistic amount regularly is better than setting an overly ambitious target.
Can protect4life help fund my child’s higher education?
protect4life allows you to arrange for a deferred lump sum to be paid on a date set out in the policy. This lump sum can contribute towards funding your child’s higher education. The policy has a minimum term of 10 years and is available from €25 a month.
Are payments into protect4life tax-deductible in Luxembourg?
Premiums paid into a life insurance policy may be tax-deductible under the conditions set out in Article 111 of the Luxembourg Income Tax Law (LIR). The annual cap is €672, with possible increases for a spouse or partner taxed jointly and for each child entitled to a tax allowance. The actual tax benefit depends on your individual tax situation. (source: Cotisations et primes d’assurance – A à Z – Administration des contributions directes – Luxembourg)
