BMO Harris Bank: Illinois Parents Spending More Than National Average on Their Children
CHICAGO, IL--(Marketwired - Feb 27, 2014) -
Parents in Illinois spend an average of $843 per month, above national average of $795
Only 18 percent of soon-to-be parents have started saving
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 Illinois parents spend above the national average on their children. Parents with at least one young child said their monthly costs total $843 per child, above the national average of $795. Future parents overestimate their monthly expenses at $2,144, on par with the national average estimate of $2,143. Fifty-two percent of all respondents recognized they should be saving for child-related costs, but only 18 percent of future parents in Illinois have started, slightly below the national average of 21 percent.
Most Illinois parents (87 percent) have a budget, though a large proportion (87 percent) have made cutbacks to cover the cost of raising kids, including 24 percent who have gone into debt.
"When children enter the picture, financial priorities are usually rearranged. 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 Julie Curran, Regional President, Chicago Metro South, 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 Illinois:
Childcare was the greatest expected and actual expense. Soon-to-be parents planning to spend on childcare estimate the cost would be $677 per child monthly. Those who currently pay for it said it costs half that at $385 (Nationally: $437 vs. $507).
Those soon-to-be parents planning to contribute to a 529 Plan estimated they would put away $264 per month, which was exactly on par with the actual contribution current parents in Illinois make (Nationally: $303 vs. $196).
Future parents estimate medical and dental expenses will cost an average of $384 per child monthly, but the average costs for parents in Illinois were much lower at $120 (Nationally: $362 vs. $110).
"One area where Illinois parents are going above and beyond is in their contribution to a 529 Plan, an investment that will pay priceless dividends," added Ms. Curran.
The results also showed what those planning to have a family and new parents in Illinois consider their top financial concerns, compared to the national average:
Financial Concern | Illinois | National |
Saving for their children's education | 85% | 87% |
Healthcare costs | 81% | 87% |
The costs of raising children | 85% | 86% |
The cost of living | 84% | 84% |
Having enough money to retire | 84% | 83% |
The value of their investments | 77% | 71% |
Job security | 55% | 67% |
Making their mortgage payments | 47% | 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 Illinois) 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).
