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BMO Harris Bank Study: One Third of Arizona Parents Haven't Saved for a Rainy Day
|By Marketwired .
|May 22, 2014 12:12 PM EDT
PHOENIX, AZ -- (Marketwired) -- 05/22/14 --
- Arizona parents with young children have saved an average of $7,345 for family emergencies
- Experts suggest having three to six months pre-tax income saved
- Parents in Arizona spend $1,532 on average for 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 35 percent of Arizona parents with young children do not have money set aside for a financial emergency, slightly above the national average (32 percent). An additional one in 10 (11 percent) have emergency savings of less than $1,000, equal to the national average. Arizona parents of young children have put away an average of $7,345, and future parents have put away $4,216.
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 that in Arizona:
- Slightly more than a third (35 percent) of current parents have nothing saved, compared to one in 10 future parents
- Of those with savings, most have savings in the range of $1,000 - $9,999 -- 34 percent of current parents and 40 percent of future parents
- A similar number of current parents and future parents have more than $10,000 saved (20 percent and 17 percent)
"Putting money away for unexpected expenses can be challenging," said Steve Johnson, Regional President, Arizona, BMO Harris Bank. "Start out saving a small amount each month and try to build from there. Consider enlisting a financial professional to review your monthly budget. They can provide a path to help you build to the recommended three to six months of savings."
Arizona parents were also asked about hidden costs associated with a child, and found that the most common costs in Arizona were increased utility/energy bills (54 percent), one or both parents needing to take time off work or quitting their job to raise the child (49 percent) and needing to buy a car or upgrade to bigger one (48 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 (86 percent) of parents in Arizona said the cost of healthcare is one of their financial concerns. Those parents said they spend an average of $12,797 in medical expenses during a child's first year, with most covered by insurance. More than a third (38 percent) said they don't know how much they spent. The average for out-of-pocket medical expenses for a child in their first year was $1,532.
The survey showed what aspects of healthcare parents and soon-to-be parents in Arizona are most concerned about:
Healthcare Cost Parents Future
Medical Insurance 79% 79%
Hospital Bills 74% 75%
Prescription Drugs 62% 60%
Regular doctor check-ups 55% 64%
Vaccines/Inoculations 49% 66%
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 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 Arizona) 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).
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