ST. LOUIS, MO--(Marketwired - Feb 27, 2014) -
- Parents in Missouri spend an average of $629 monthly per child, while prospective parents estimate the cost to be more than triple that
- Only 13 percent of families planning to have a child have saved for child-related expenses, well below the U.S. average of 21 percent
- 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 Missouri residents planning a first child overestimate what actual parents say they spend by triple the amount. The survey found that soon-to-be parents estimate they will spend an average of $1,952 per month on their first child, while current parents of young children estimate they spend only $629. Fifty-four percent of all Missouri respondents recognized the need to save for kids. Despite this realization and the high estimated cost, only 13 percent of prospective parents in Missouri have something saved specifically for child-related expenses, well below the national average of 21 percent.
Most parents of young children in Missouri (83 percent) have budgeted for the cost of raising them. However, one in three (36 percent) have gone into debt to cover the cost of raising children.
"While our study shows that raising a child isn't as expensive as most prospective parents think, it's still important for couples to begin saving as soon as possible for child-related expenses," said Sandy Washington, Retail Vice President, St. Louis, BMO Harris Bank. "Saving something regularly can help provide peace of mind for your family's financial security."
The study, which surveyed parents expecting to have a child in the next five years or parents with children less than 10 years old, found that in Missouri:
- Childcare was the greatest anticipated and actual cost. Future parents expecting to spend on childcare estimate the cost would be $525 per child monthly, versus $425 for those who currently pay for it (Nationally: $507 vs. $439).
- Those soon-to-be parents planning to contribute to a 529 Plan said they expected to save $142 on a monthly basis. Current parents who already contribute said they put away even less -- $94 (Nationally: $303 vs. $196).
- Future parents had a high expectation for school expenses at $346, but current parents said the monthly cost was $73 (Nationally: $240 vs. $143).
The results of the survey also showed what those planning to have a family and parents of young children in Missouri consider their top financial concerns, compared to the national average:
|Saving for their children's education||80%||87%|
|The costs of raising children||83%||86%|
|The cost of living||86%||84%|
|Having enough money to retire||83%||83%|
|The value of their investments||74%||71%|
|Making their mortgage payments||50%||51%|
At a national level, the survey also 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 Missouri) 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).