LEAWOOD, KS--(Marketwired - May 22, 2014) -
- Kansas parents with young children have saved an average of $6,966 for family emergencies, 45 percent more than Missouri parents
- Experts suggest having three to six months pre-tax income saved
- 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 34 percent of Kansas parents with young children do not have money set aside for a financial emergency, slightly above the national average (32 percent). An additional eight percent have less than $1,000 saved. Parents of young children in Kansas have put away an average of $6,966. Future parents in Kansas have saved less -- $3,396. In Missouri, 38 percent of parents have no rainy day savings. On average, Missouri parents have saved $4,796 and future parents have saved nearly the same -- $4,778.
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:
- In Missouri, 38 percent of current parents have nothing set aside for an emergency, and 12 percent have less than $1,000
- One third of current Kansas parents have $1,000 - $9,999 set aside, compared to 28 percent of future parents with savings in that range. That percentage increases to 36 percent for current Missouri parents, and 45 percent for future parents
- Twenty-six percent of current parents in Kansas have more than $10,000 saved, one of the highest in the states surveyed, compared to only 14 percent for their Missouri counterparts.
- Fourteen percent of future parents in Kansas have emergency savings greater than $10,000; that number rises to 17 percent for future parents in Missouri.
"It's encouraging to see that parents from both Kansas and Missouri have some dollars set aside for emergencies," said Brad Smith, Regional President, BMO Harris Bank. "Their goal should be to have three to six months saved for a rainy day. A financial professional can look at their budget and perhaps find ways to help them save more."
Kansas parents were also asked about hidden costs associated with a child, and found that the most common costs were increased utility/energy bills (45 percent), needing to buy a car or upgrade to a bigger one (44 percent) and one or both parents needing to take time off work or quitting their job to raise the child (39 percent). When Missouri parents were asked about the same associated hidden costs, their responses were: increased utility/energy bills (57 percent), one or both parents needing to take time off work or quitting their job to raise the child (41 percent) and needing to buy a car or upgrade to a bigger one (34 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 (89 percent) of parents in Kansas said the cost of healthcare is one of their financial concerns. Parents said they spend an average of $10,052 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 $1,926. Nearly half (42 percent) said they don't know how much they spent.
The survey showed what aspects of healthcare parents and soon-to-be parents in Kansas and Missouri are most concerned about:
|Healthcare Cost||Parents (KS)||Future Parents (KS)||Parents (MO)||Future Parents (MO)|
|Regular doctor check-ups||45%||47%||44%||60%|
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 Kansas and 150 in 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 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).