CHICAGO, IL--(Marketwired - Feb 27, 2014) -
- Survey shows parents spend an average of $795 per young child each month
- Most believe parents should have money saved before having their first child
- 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 American parents with young children spend an average of $795 per month on each child. Future parents estimated the costs being much higher -- $2,143 per month. A majority of Americans (57 percent) said saving for child-related costs is important, yet only one in five prospective parents (21 percent) have begun to save for child-related expenses.
A majority of current parents (82 percent) who have at least one child have a budget in place for family costs, although 28 percent of parents have gone into debt.
"When starting a family, caring for your kids jumps to the top of everything, including financial priorities, and that can mean stretching dollars further than they should go. It's encouraging that a healthy majority of parents have a budget in place," said Chris McComish, Executive Vice President and Head of Retail Banking, BMO Harris Bank. "BMO Harris Bank can provide families with all the tools needed to stay on track with financial goals during such an important life stage, from online budget tracking tools to setting up an education savings plan."
The study, which surveyed parents expecting to have a child in the next five years or with children less than 10 years old, found:
- Childcare was the greatest anticipated and actual cost. Future parents expecting to spend on childcare estimate the cost would be $437 per child monthly versus $507 for those who currently pay for it.
- Those soon-to-be parents planning to contribute to a 529 Plan estimated they would put away $303 on a monthly basis. Current parents who already contribute said they put away less - $196 per month.
- Medical and dental expenses cost parents on average $110 per child monthly, versus the $362 estimate from future parents.
The results also showed that child-associated costs are top-of-mind when it comes to what parents are concerned about financially:
- Saving for their children's education (87 percent)
- Healthcare costs (87 percent)
- The cost of raising children (86 percent)
- The cost of living (84 percent)
- Having enough money to retire (83 percent)
- The value of their investments (71 percent)
- Job security (67 percent)
- Making their mortgage payments (51 percent)
"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 commissioned by BMO Harris Bank with an online sample of 1,500 Americans 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® and BMO Harris ® are trade names 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).