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.