SARASOTA, FL--(Marketwired - Feb 27, 2014) -
- Parents in Florida spend an average of $887 monthly per child, while prospective parents estimate the cost will be more than triple that
- Florida parents say the cost of raising a child in the Sunshine State is 10 percent higher than the national average
- 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 Florida parents spend $887 per month on their children, which is more than average Americans, who spends $795. The survey found that prospective parents estimate that they will spend even more on their first child -- an average of $2,971 per month, 40 percent higher than the national average estimate of $2,143. Fifty-five percent of all Florida respondents recognized the need to save for the costs of raising a family. When it comes to putting funds away for children, however, future parents in Florida are below the national average of those who have started saving (16 percent versus 21 percent).
Of those Florida respondents who already have children, 72 percent have a budget in place, but eight in 10 (82 percent) had to make cutbacks to cover the cost of raising them, including 27 percent who have gone into debt.
"Financial priorities usually get moved around when children enter the picture. While it's true that most parents have to change their spending habits, it's comforting to know that most of them do so with a budget in place," said Dave Maraman, Florida Regional President, 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 Florida:
- Childcare was the greatest expected and actual cost of those future parents expecting to incur childcare expenses. They estimate the cost would be $561 per child monthly, versus the cost of $360 for those who currently pay for it (Nationally: $507 vs. $437).
- Prospective parents planning to contribute to a 529 Plan said they expect to put away $514 on a monthly basis. By contrast, current parents who contribute said they actually put away only $202 (Nationally: $303 vs. $196).
- Future parents estimate medical and dental expenses will average $464 monthly, but the average cost for parents was only $114 (Nationally: $362 vs. $110).
"Based on our survey results, those who are planning to become parents in Florida are not alone when it comes to high outlooks for the costs of raising their family. I'm glad to see they plan to save aggressively for their children's education; that's a very worthwhile investment," added Mr. Maraman.
The results also showed what prospective and new parents in Florida consider their top financial concerns, compared to the national average:
|Saving for their children's education||76%||87%|
|The costs of raising children||75%||86%|
|The cost of living||84%||84%|
|Having enough money to retire||79%||83%|
|The value of their investments||54%||71%|
|Making their mortgage payments||48%||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 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%, 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).