BMO Harris Bank Study

Florida Parents Below National Average in Saving for Financial Emergency

SARASOTA, FL--(Marketwired - May 22, 2014) -

• Florida parents with young children have saved an average of $5,681 for family emergencies
• Experts suggest having three to six months pre-tax income saved
• Parents in Florida spend $1,906 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 Florida 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 has emergency savings of less than $1,000. Parents of young children have put away an average of $5,681. Future parents have saved less -- $3,831.

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 Florida:

• Slightly more than a third (35 percent) of current parents have no savings, while four in 10 (39 percent) of future parents don't have a 'rainy day' fund
• Of those with savings, most have savings in the range of $1,000 - $9,999 -- over a third of current parents (35 percent) and 39 percent of future parents
• Twenty percent of current parents have more than $10,000 saved, compared to 15 percent of future parents with emergency savings in excess of $10,000

"With all of the costs associated with raising kids, saving money for emergencies can be difficult," said Dave Maraman, Regional President, Florida, BMO Harris Bank. "Working with a financial expert to help you create a manageable budget can be a great way to help parents begin to put away the recommended three to six months of emergency savings." 

Florida parents were also asked about hidden costs associated with a child, and found that the most common costs were increased utility/energy bills (59 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 (54 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.