INDIANAPOLIS, IN--(Marketwired - May 22, 2014) -
- Indiana parents have saved an average of $3,069 for a family financial emergency, a third of the national average
- Experts suggest having three to six months pre-tax income saved
- Parents in Indiana spend $1,839 on out-of-pocket medical expenses in child's first year
- 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 41 percent of Indiana parents with young children do not have money set aside for a financial emergency, well above the national average of 32 percent. An additional 12 percent have less than $1,000 in emergency savings. The average savings for Indiana parents is $3,069, compared to $9,737 at the national level. Future parents in Indiana have saved up twice as much as current parents -- an average of $6,868.
The study, which surveyed people expecting to have a child in the next five years and current parents with children less than 10 years old, revealed that in In diana:
- Four in 10 (41 percent) current parents have no savings, and 43 percent of future parents have no rainy day funds set aside
- One-fifth (22 percent) of future parents have less than $1,000 saved, double the national average
- Over a third of current parents (35 percent) have $1,000 - $9,999 set aside, while less than a quarter (23 percent) of future parents have savings in that range
- A similar number of current parents and future parents have $10,000 or more saved (12 percent and 13 percent)
"It's never too early to start saving. Creating a budget that includes saving and sticking to that budget will help a family better prepare for the financial responsibility of children," said Tim Massey, Regional President, Indiana, BMO Harris Bank. "Having children is a life changing experience, and getting finances in order can help parents stay focused on enjoying the new member of the family."
Indiana parents were also asked about other hidden costs associated with a child, and found that the most common costs in Indiana were increased utility/energy bills (43 percent), needing to buy a car or upgrade to a bigger one (42 percent) and one or both parents taking time off or quitting a job to raise the child (38 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 savi ngs needed to cover medical costs. A majority (91 percent) of parents in Indiana said the cost of healthcare is one of their financial concerns. The Indiana parents surveyed said they spend an average of $7,634 in medical expenses, with most covered by insurance. The average for out-of-pocket medical expenses for a child in their first year was $1,839. More than a third (39 percent) said they don't know how much they spent.
The survey showed what aspects of healthcare parents and soon-to-be parents in Indiana are most concerned about:
|Healthcare Cost||Parents||Future Parents|
|Regular doctor check-ups||41%||55%|
At the national level the survey revealed:
- U.S. 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 hidden 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 Indiana) 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).