How do People Spend Their Tax Refunds?

Each year, a large amount of people enjoy tax refunds come tax time, some of them pretty sizeable. These refunds are often very looked forward to by filers, but why? What do they plan to do with the additional money?

 

While it’s different for everyone, a recent TaxSlayer survey took a look at what people had planned for their refunds.

Most people, a whopping 43%, said that they planned to put their money in savings. This is obviously a smart use for a tax refund, but let’s just hope that people make good on their plans! So many people have good intentions for their money...but then don’t quite follow through.

42% of people also planned to use their money wisely, saying that it would go to pay off debts. This is another smart use of a refund, especially if the money is used to pay down or off debts that are negatively affecting one’s credit score and/or growing larger due to interest.

Other uses for the money weren’t quite as noble as the two above.13% wanted to buy a luxury item that they’d been waiting for while another 13% wanted

to fund a fun experience, like skydiving or a vacation. While these uses are not necessarily bad, they aren’t the best choices if you have other expenses that need to be taken care of.

Sadly, only 9% of people surveyed said that they’d use their money to fund a retirement plan. That’s unfortunate since studies show that most Americans are vastly under-prepared for retirement.

As you can see, many people do have good plans for their tax refunds, while others plan to use them frivolously. Hopefully you are in that first group! Whether you are or not, it’s a good idea to visit a tax professional to talk about your refund and the best possible ways that you could spend or invest it.