MILWAUKEE, WI--(Marketwired - Feb 27, 2014) -
- Parents in Wisconsin spend $637 monthly per child, slightly below the national average of $795
- Despite lower-than-average costs, 92 percent still have to make cutbacks to pay for child-related costs
- 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 Wisconsin parents spend $637 per child on a monthly basis, compared to the national average of $795. The survey found that Wisconsin residents planning to have children overestimate what they will spend on their first child, but their estimate of $1,288 per month is well below the national average estimate of $2,143. Fifty-four percent of all Wisconsin respondents recognized the need to save for kids. Despite this and the high estimated costs, only a quarter of future parents (24 percent) say they have started saving for child-related costs, slightly above the national average of 21 percent.
A majority of current parents in Wisconsin (82 percent) say they have a budget in place, but 9 in 10 (92 percent) had to make cutbacks to cover the cost of raising kids, and nearly a quarter (24 percent) have gone into debt.
"Like many parents across the country, those in Wisconsin anticipate they'll spend more on raising their kids than they actually end up doing. That being said, having a child can turn your normal expenditures on their head and thinking about the costs ahead of time -- even if it means overestimating -- is one of the best ways to prepare," said Kara Kaiser, Regional President, Milwaukee, 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 Wisconsin:
- Childcare was the greatest anticipated and actual cost of those future parents expecting to incur childcare expenses, they estimate the cost would be $353 per child each month versus the $394 expected by those who currently pay for it (Nationally: $437 vs. $507).
- Those soon-to-be parents planning to contribute to a 529 Plan also said they expected to put away only $94 on a monthly basis. Current parents who contribute said they already put away about $113 on average (Nationally: $303 vs. $196).
- Future parents estimate medical and dental expenses will cost an average of $362, but the average spend for parents was in fact much lower -- $110 (Nationally: $362 vs. $110).
"Having a budget in place, which most parents in Wisconsin do, will help to allocate funds to each of the costs that go along with raising a child," added Ms. Kaiser.
The results also showed what expecting and new parents in Wisconsin consider their top financial concerns, compared to the national average:
|Saving for their children's education||77%||87%|
|The costs of raising children||83%||86%|
|The cost of living||84%||84%|
|Having enough money to retire||87%||83%|
|The value of their investments||62%||71%|
|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 Wisconsin) 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).