MINNEAPOLIS/ST. PAUL, MN--(Marketwired - Feb 27, 2014) -
- Parents in Minnesota spend an average of $619 on child-related costs each month
- A quarter of Minnesota parents have gone into debt to cover cost of raising children
- 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 parents in Minnesota have average child-related expenses of $619 per month, compared to a national average of $795. Minnesota residents planning to have children overestimated the average cost at $1,810 per month on their first child, but this is below the national average of $2,143.
Fifty-four percent of all Missouri respondents recognized the need to save for having a family. Despite this, only 19 percent of prospective parents in Minnesota have something saved specifically for child-related expenses, below the national average of 21 percent.
Most parents of young children (82 percent) have budgeted for the cost of raising them. However, 25 percent have gone into debt to cover the cost of raising children.
"People in Minnesota planning a first child aren't alone in overestimating the cost of a child," said Todd Senger, Regional President, Minnesota, BMO Harris Bank. "However, it is still important to prepare financially by starting to save as soon as possible to avoid going into debt and to be prepared for the inevitable expenses that come with having children."
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 Minnesota:
- Childcare was the greatest expected and actual cost. Soon-to-be parents expecting to spend on childcare slightly underestimated the cost at $424 per child monthly, versus $443 for those who currently pay for it (Nationally: $507 vs. $437).
- Those soon-to-be parents planning to contribute to a 529 Plan said they expected to save $198 on a monthly basis. Current parents who already contribute said they put away less -- $116 (Nationally: $303 vs. $196)
- Prospective parents estimate medical and dental expenses will cost an average of $253 per child monthly, but the average spend for parents was much lower -- $87 (Nationally: $362 vs. $110).
The results of the survey also showed what those planning to have a family and parents of young children in Minnesota consider their top financial concerns compared to the national average:
|Saving for their children's education||79%||87%|
|The costs of raising children||85%||86%|
|The cost of living||86%||84%|
|Having enough money to retire||88%||83%|
|The value of their investments||65%||71%|
|Making their mortgage payments||53%||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 Minnesota) 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).