Key statistics from The Westpac Financial Future Report:
- 86 per cent of parents and grandparents agree that setting up a savings account for children at a young age helps to set them up for success later in life;
- Parents’ main motivation for opening their child’s savings account from an early age centres around giving them a financial head start (55 per cent) and helping them understand the value of money as early as possible (46 per cent);
- 66 per cent of parents are worried about how financially savvy their children will be by the time they finish high school;
- For those parents/grandparents who didn’t have a savings account as a child, 74 per cent wish their parents or grandparents had set up an account for them during their childhood; and
- 71 per cent of Australian children under the age of five have a savings account.
This New Year’s Day, Westpac has announced that it will offer Australian babies born in 2017 a $200 contribution into their own savings account that they can access when they are 16 years old1.
The ‘Bump’ initiative is designed to encourage positive savings habits early in life for the 300,0002 babies expected to be born this year, and to help parents and grandparents kick start a brighter financial future for the next generation of Australians. Parents of eligible babies can apply for a Westpac Bump Savings account online at westpac.com.au/dearbump. Westpac expects about a quarter of the babies born to take up the offer.
To mark Westpac’s 200th anniversary, the $200 contributions will begin to be deposited into the accounts of registered babies3 from the 8th April 2017, and ongoing for the remainder of the year.
George Frazis, Chief Executive Consumer Bank at Westpac Group, said the initiative reflects Westpac’s commitment to supporting the future of Australia, by providing a helping hand to parents and grandparents to instil positive financial habits in their children from a young age.
"The Bump initiative helps Westpac to mark the beginning of our bicentennial year in the best way possible – by investing in the next generation of Australians and inspiring good savings habits with the potential to have a lifelong impact," Mr Frazis said.
Coinciding with the announcement is the launch of The Westpac Financial Future Report4, which shows 86 per cent of parents, grandparents and prospective parents believe that opening a savings account for children at an early age sets them up for success later in life, yet only 71 per cent of Australian children under five years of age have one.
In the New Year, Australian parents will be focusing on instilling positive financial habits in their children, with the Report finding that a major motivation in setting up their children’s bank accounts was to help them understand the value of money from a young age.
Mr Frazis added: "Setting up our future generations for success will help Australia to thrive. Teaching children to save from an early age is known to have a positive impact on future financial stability, so we're encouraging all parents and grandparents to help kick start this learning process and help them start preparing for a brighter future on this new year's day.
"By building on an initial $200 deposit at birth with a $20 contribution every week, for example, will potentially amass approximately $19,0005 in savings by the time the child turns 16. 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.
"The Report also found that the majority (66 per cent) of Australian parents and grandparents believe children should have restricted access to their savings until they are over the age of 16.
"We've listened to parents and grandparents and believe the Bump Savings account will demonstrate the benefits of long term savings to young people, so by the time they turn 16, they might consider continuing to save their money," Mr Frazis concluded.
The Bump initiative builds on the many programs introduced as part of Australia’s first bank's 200 year celebrations, all dedicated to supporting the future prosperity of the nation. From the Westpac Bicentennial Foundation scholarship program supporting 100 of the nation's best and brightest people to further their education each year, to the Businesses of Tomorrow program which will highlight 200 businesses with the potential over time to change the face of Australian business for the better; the Bump initiative will help many Australians of the next generation to kick start a brighter financial future.
Registrations of interest for a Westpac Bump Savings account with the $200 deposit open today at westpac.com.au/dearbump
New Year Money Smart Tips for Parents
Start small and start early
Set aside a small amount of money in to an account on a monthly or weekly basis, to build a nest egg for your child for them to continue as they grow.
For example, by saving $20 a week from when a child is born, at 16 they will have approximately $19,000 (at 1.5 per cent interest).
Teach the value of money
Encourage children to make spending decisions early. Teach them what they may need to do to earn money (i.e. washing the car), then how much of that money they will use up by purchasing the item they want.
Set goals with your child
Work out what they want to do with their money. Especially if the child is looking after their money carefully, it’s important that you work out what they can spend it on if they wish. It’s not fun saving everything, especially if the money is a gift, but you can, for example, spend half on a toy and save the remaining.
Set a good example
By referring to the value of money in everyday life, you’ll begin to convey the importance of looking after it. Simple things like explaining why you’re buying a cheaper brand from the supermarket over a more expensive brand can be beneficial.
About the Bump initiative
Westpac will provide the opportunity for Australian babies born between 1 January 2017 and 31 December 2017 to receive a $200 contribution into their own Bump Savings account opened from 1 January - 31 December 2017, with a grace period until 31 May 20186. The Bump initiative is designed to encourage positive savings habits early in life for the 300,000 babies expected to be born during this period, and to help parents and grandparents kick start a brighter financial future for the next generation of Australians.
About the Westpac Financial Future Report
The Westpac Financial Future Report, powered by Vision Critical, surveyed 1593 Australians with children or grandchildren under the age of 12 and 50 prospective parents (total sample of 1641). The survey was conducted online between 23 September and 5 October 2016.
1. The $200 deposit offer applies for babies born from 1 January 2017 to 31 December 2017. Offer may be withdrawn or extended at the bank’s discretion.
2. According to the Australian Bureau of Statistics, there were 299,697 Australian births in 2014
3. The $200 will be deposited if the Westpac Bump Savings account is opened and the child’s identity verified by 31 May 2018.
4. The Westpac Financial Future Report, powered by Vision Critical, surveyed 1593 Australians with children or grandchildren under the age of 12 and 50 prospective parents (total sample of 1641). The survey was conducted online between 23 September and 5 October 2016.
5. Example only. Based on the Westpac savings calculator, by building on an initial $200 deposit with a $20 contribution every week at an interest rate of 1.5 per cent, this amount will amass to $19,054.02 in savings by the time this child turns 16 (based on no withdrawals and interest accrued on $200 from child’s 1st birthday). (https://services.westpac.com.au/calculators/savings/html_version/SavingsPlan/Savings.html).
6. The $200 will be deposited if the Westpac Bump Savings account is opened and the child’s identity verified by 31 May 2018. Children must be born from 1 January 2017 and 31 December 2017 to be eligible for the Bump Initiative. Deposit will be made within 1 business day of ID verification. $200 offer limited to one per person. The $200 will be available to withdraw in the month of the child’s 16th birthday and will be forfeited if the account is closed prior. Read the terms & conditions available from 8 April 2017 at westpac.com.au before making a decision and consider whether this product is appropriate for you. © 2016 Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.
Source: Westpac Banking Corporation