BMO Harris Bank Study: Florida Parents Below National Average in Saving for Financial Emergency

Marketwired

SARASOTA, FL--(Marketwired - May 22, 2014) -

  • Florida parents with young children have saved an average of $5,681 for family emergencies
  • Experts suggest having three to six months pre-tax income saved
  • Parents in Florida spend $1,906 on average for out-of-pocket medical expenses in child's first year
  • BMO Harris Bank offers tips and online tools for future and new parents to manage family expenses

A new study released today by BMO Harris Bank found that 35 percent of Florida parents with young children do not have money set aside for a financial emergency, slightly above the national average (32 percent). An additional one in 10 has emergency savings of less than $1,000. Parents of young children have put away an average of $5,681. Future parents have saved less -- $3,831.

The study, which surveyed both parents with children less than 10 years old and those expecting to have a child in the next five years, revealed that in Florida:

  • Slightly more than a third (35 percent) of current parents have no savings, while four in 10 (39 percent) of future parents don't have a 'rainy day' fund
  • Of those with savings, most have savings in the range of $1,000 - $9,999 -- over a third of current parents (35 percent) and 39 percent of future parents
  • Twenty percent of current parents have more than $10,000 saved, compared to 15 percent of future parents with emergency savings in excess of $10,000

"With all of the costs associated with raising kids, saving money for emergencies can be difficult," said Dave Maraman, Regional President, Florida, BMO Harris Bank. "Working with a financial expert to help you create a manageable budget can be a great way to help parents begin to put away the recommended three to six months of emergency savings." 

Florida parents were also asked about hidden costs associated with a child, and found that the most common costs were increased utility/energy bills (59 percent), one or both parents needing to take time off work or quitting their job to raise the child (49 percent) and needing to buy a car or upgrade to bigger one (54 percent). 

"Consumers are currently saving about 4.5 percent of their after-tax incomes, in line with the average of the past decade. While this is below the more than 6 percent savings rate in the wake of the recession -- as households worked hard to repair their balance sheets -- it remains well above the lows of around 2.5 percent that we experienced during the housing bubble period," said Michael Gregory, Head of U.S. Economics, BMO Capital Markets.

Savings for Medical Costs Need Regular Check-Ups Too

The survey also examined the savings needed to cover medical costs. A majority (81 percent) of parents in Florida said the cost of healthcare is one of their financial concerns. Parents said they spend an average of $7,730 in medical expenses during their child's first year, with most covered by insurance. The average for out-of-pocket medical expenses for a child in their first year was $1,906, but nearly half (45 percent) said they don't know how much they spent.

The survey showed what aspects of healthcare parents and soon-to-be parents in Florida are most concerned about:

         
Healthcare Cost   Parents   Future Parents
Medical Insurance   65%   68%
Hospital Bills   62%   69%
Prescription Drugs   55%   48%
Regular doctor check-ups   49%   63%
Vaccines/Inoculations   42%   55%
         

At the national level the study revealed:

  • American parents have an average of $9,737 saved for an emergency
  • Future parents have an average of $5,523 set aside
  • Average spend on medical costs is $9,676, with $1,297 of that being out-of-pocket
  • The most common costs were the need to buy a car or upgrade to a larger vehicle (49 percent), increased utility/energy bills (46 percent) and taking time off work (43 percent).

"As the economy continues to improve this year, particularly on the jobs front, it will help fuel personal income growth. This, along with a steady 4.5 percent savings rate, will result in rainy day savings building up more quickly, but this should not be a call to reduce the savings rate. It would be prudent to keep saving at the same pace, redirecting the flow to help finance future big-ticket outlays, paying down debt or saving for retirement," added Mr. Gregory.

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 commissioned by BMO Harris Bank with an online sample of 1,500 Americans (including 150 in Florida) 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 percent, 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 $593 billion in assets (as of January 31, 2014).

Contact:
Media
Carey Allen
carey.allen@bmo.com
480-558-6383

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