A recent survey conducted by Vanguard highlights the financial challenges parents face when saving for their children. The study found that nearly 70% of parents reported spending more than expected on child-related expenses this year. Despite these higher costs, over 70% of parents continue to keep discretionary and emergency funds in traditional bank checking or savings accounts, which often have interest rates below the rate of inflation.
More than half of surveyed parents said they spent at least $1,000 on unexpected or emergency expenses for their children in the past year, with 17% reporting expenditures of $5,000 or more.
“Parents are overloaded with spending and savings decisions—from how much to budget for daycare to where to save for extracurricular activities and everyday expenses,” said Matt Benchener, Managing Director of Vanguard’s Personal Investor business. “Using a high-yield savings vehicle, like Vanguard’s Cash Plus Account, which currently earns nine times more than a traditional bank savings account, helps parents build a financial buffer for everyday expenditures and moments when it’s needed most—like a late-night emergency room visit or unexpected need for childcare coverage we as parents know so well.”
When it comes to saving for education-related costs, 69% of parents use traditional bank accounts while only 10% utilize a 529 savings plan. The gap is wider among younger generations: just 8% of Millennials and 6% of Gen Z respondents reported using a 529 plan.
“Along with identifying gaps in how parents save for short-term and emergency expenses, this survey also revealed the importance of providing parents with additional information on 529 education savings plans. These plans offer tax-deferred growth and tax-free withdrawals for many education expenses, including college, K-12, and trade school tuition, room and board, computers, and much more,” added Benchener.
Vanguard’s Cash Plus Account is currently yielding an annual percentage yield (APY) of 3.65%, significantly higher than the average national bank savings yield according to FDIC data as of August 2025 (https://www.fdic.gov/resources/bankers/national-rates/). More details about Vanguard’s Cash Plus Account can be found at vanguard.com/cashplus. For information on Vanguard’s 529 plan offerings visit https://investor.vanguard.com/accounts-plans/529-plans.
The survey was carried out by Big Village among a representative sample of U.S. adults who are parents with children under age 18 living at home. It used quota sampling methods to ensure results reflected national demographics based on gender, age, region, race/ethnicity, and education.
Vanguard was founded in 1975 and is one of the world’s largest investment management companies. The firm provides investments and retirement services globally through various channels including direct-to-investor platforms and workplace plans.
