PHOENIX, AZ--(Marketwired - Feb 27, 2014) -
- Parents in Arizona spend an average of $661 per month on child-related costs
- Most (85 percent) prospective and new parents in Arizona say they are concerned about saving for their child's education
- BMO Harris offers tools and advice for all life stages, from planning a baby to raising a family
A new study released today by BMO Harris Bank found Arizona parents spend $661 each month on child-related costs, less than the average American family at $795. The survey also found that parents planning to have a child estimate that they will spend an average of $1,875 per month on their first child, less than the national average of $2,143. Fifty-eight percent of all Arizona respondents recognized the need to save for the costs of raising a family. However, only 23 percent of future parents have started saving, similar to the national average of 21 percent.
A majority (82 percent) said that they have a budget in place for their family. Still, close to half of parents (46 percent) have had to dip into savings while 26 percent have gone into debt.
"Many priorities change when kids enter the picture -- especially financial priorities. Most parents have to change their spending habits, but what's encouraging is that most of them are ensuring they do so with a budget in place," said Steve Johnson, Regional President, Arizona, BMO Harris Bank.
The study, which surveyed parents expecting to have a child in the next five years or with children less than 10 years old, found that in Arizona:
- Of the future parents expecting to manage childcare costs, they estimate they will spend $605 per child monthly, versus the average cost of $288 expected by those who currently pay for it (Nationally: $507 vs. $437).
- Prospective parents expecting to contribute to a 529 Plan said they would put away only $141 on a monthly basis, but parents actually put away close to $228 (Nationally: $303 vs. $196).
- Future parents estimate medical and dental expenses will average $229 per child monthly, but the average cost for parents was less than half that -- $120 (Nationally: $362 vs. $110).
"It's interesting to note that the area both groups match closest is in planning to fund their child's education. Contributing to a 529 Plan is an investment that will pay future dividends," Mr. Johnson added.
The results also showed what prospective and new parents in Arizona consider their top financial concerns, compared to the national average:
|Saving for their children's education||85%||87%|
|The costs of raising children||85%||86%|
|The cost of living||90%||84%|
|Having enough money to retire||89%||83%|
|The value of their investments||79%||71%|
|Making their mortgage payments||64%||51%|
At a national level, the survey found:
- Most parents (85 percent) report having to make cutbacks to pay for children.
- More than a quarter (28 percent) have gone into debt.
- 82 percent of new and expecting parents have a budget in place.
"The cost of raising a child is a major outlay for households, but current and would-be parents have to be careful to incorporate these actual and expected outlays in their family budgets. This often means cutting back on spending elsewhere and exercising caution when using credit," said Michael Gregory, Head of U.S. Economics, BMO Capital Markets. "Households across America have made remarkable progress in repairing their balance sheets during the past few years. Across all households, mortgage and consumer credit peaked at nearly 125 percent of after-tax personal incomes during 2007 and it has since fallen under 99 percent, hovering around its lowest level in more than a decade."
For more information about planning for the next Life Stage, visit bmoharris.com/yourfinanciallife
Survey results cited in this release are from a Pollara survey with an online sample of 1,500 Americans (including 150 from Arizona) conducted between November 22nd and 29th, 2013. This includes 993 interviews with parents of children under 10 and 507 interviews with Americans who expect to have their first child in the next 5 years. The margin of error for a probability sample of this size is ± 2.5%, 19 times out of 20.
About BMO Harris Bank
BMO Harris Bank provides a broad range of personal banking products and solutions through more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris Bank® is a trade name used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $537 billion in assets (as of October 31, 2013).