A Savings SOS: Parents Struggle with Savings Inertia, According to Vanguard Survey

Parents spend more than expected on child-related expenses while their hard-earned savings often lose value in traditional bank checking and savings accounts that trail the pace of inflation.

VALLEY FORGE, Pa., Aug. 20, 2025 /PRNewswire/ -- Parents are overwhelmed with expenses, with nearly 70% spending more than expected on their children this year, according to Vanguard's new consumer survey. Parents are also missing out on opportunities to earn strong returns on their savings with more than 70% of parents primarily keeping every day, discretionary, and emergency funds for their children in traditional bank checking or savings accounts with interest rates trailing the pace of inflation.

Additionally, more than half of parents (51%) reported spending an estimated $1,000 or more in the last year on unexpected or emergency expenses for their children, with 17% spending $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 times¹ 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 children's education-related expenses, 69% reported using traditional bank checking or saving accounts, with only 10% leveraging a 529 savings plan. When broken out by generation, the difference was even more stark with only 8% of Millennials and 6% of Gen Z utilizing a 529 savings plan for education-related expenses.

"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.

To learn more about Vanguard's Cash Plus Account, which is currently yielding 3.65% APY¹, visit vanguard.com/cashplus.

Additional information about Vanguard's 529 plan offerings, can be found here: https://investor.vanguard.com/accounts-plans/529-plans. 

Survey methodology 
The Cash Plus Survey was fielded by Big Village among a representative sample of 1,005 U.S. adults 18 years of age and older who are parents with children 17 years of age and under living at home. This survey was live on July 24, 2025. Quota sampling was used to collect a nationwide sample of respondents who are weighted by gender, age, region, race/ethnicity, and education to mirror the demographical composition of the U.S. population using Current Population Survey proportions.

About Vanguard
Founded in 1975, Vanguard is one of the world's leading investment management companies. The firm offers investments, advice, and retirement services to tens of millions of individual investors around the globe—directly, through workplace plans, and through financial intermediaries. Vanguard operates under a unique, investor-owned structure where Vanguard fund shareholders own the funds, which in turn own Vanguard. As such, Vanguard adheres to a simple purpose: To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success. For more information, visit vanguard.com.

¹The Cash Plus sweep program APY (annual percentage yield) is 3.65% as of August 14, 2025. The APY will vary and may change at any time. APY is current as of date of publication. Current APY is available at vanguard.com/cashplus. Source for average bank savings yield of .38%: FDIC National Rate Caps as of August 8, 2025. Bank savings accounts offer different services and features than a Vanguard Cash Plus Account. For example, savings accounts often offer features like overdraft protection, ATM access, bill pay services and other conveniences that Cash Plus Accounts do not offer. Cash Plus Accounts allow you to hold certain securities that bank savings accounts cannot hold. In addition, Cash Plus Accounts are subject to fraud prevention restrictions such as holding periods and transaction limits, which may not apply to a bank savings account. There may be other differences between these products that you may want to consider before choosing which option is best for you. 

The Vanguard Cash Plus account is a brokerage account offered by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA and SIPC. Under the Sweep Program, Eligible Balances swept to Program Banks are not securities: They are not covered by SIPC but are eligible for FDIC insurance, subject to applicable limits. Money market funds held in the account are not guaranteed or insured by the FDIC but are securities eligible for SIPC coverage. See the Vanguard Bank Sweep Products Terms of Use and Program Bank list on vanguard.com for more information.

All investing is subject to risk, including possible loss of principal. 

For more information about any 529 college savings plan, contact the plan provider to obtain a Program Description, which includes investment objectives, risks, charges, expenses, and other information; read and consider it carefully before investing. If you are not a taxpayer of the state offering the plan, consider before investing whether your or the designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program. Vanguard Marketing Corporation serves as distributor for some 529 plans. 

Earnings on nonqualified 529 plan withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements. State tax treatment of withdrawals used for i) expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school, ii) expenses related to apprenticeship programs, or iii) student loan repayments is determined by the state(s) where the taxpayer files state income tax. Please consult with a tax advisor. 

Vanguard Marketing Corporation, Distributor of the Vanguard Funds.

SOURCE Vanguard