Most Americans will save their money or pay off debt with their returns

While tax refunds may not be getting us out of debt, they are still doing some good for us.

GoBankingRates says the vast majority of Americans — 79 percent — plan to save their tax refunds or pay off debt with it, a slight increase over last year’s 75 percent who planned to do one or both.

tax refund plans

Among the findings, 41 percent of Americans plan to save their tax refunds, while 38 percent plan to pay off debt. Only 11 percent are stashing it away for a vacation, while 5 percent of Americans will spend their tax refunds on a major purchase.

According to the survey, 21 percent of Americans don’t receive a tax refund. Of those who do, the average amount that’s received is $2,680. That’s a decent chunk of change to put into savings or pay down debt. Or you could do both by divvying up your return.

Considering none of us are ready for an emergency and we aren’t prepared because our priorities are out of whack, it’s nice to see that Americans know they need to buckle down and contribute to their savings as much as they can when they can, even if it’s only a little bit.

Who is doing the saving?

A high 41 percent of Americans plan to save their tax refunds this year, but when broken down by age group, some are more willing to save than others. The survey says it’s younger millennials that are the most willing to save their tax refunds: 54 percent. Older millennials (25-34-year-olds) will put their returns toward paying debt off.

Older Americans, like baby boomers, are the ones most likely to spend their returns even though retirement isn’t a walk in the park for them. Twenty percent of boomers were more likely to splurge their tax refunds on a vacation. This is more than double from last year.

income level spending tax refund

The more a person earns, the more likely they are to save. The survey shows that 28 percent of Americans making less than $25,000 will stash their cash away, while 45 percent of those making between $75,000-$100,000 will do the same. It’s only at income levels $150,000 or above where things become a tad predictable: 50 percent of Americans in this bracket will put their money toward a vacation, while paying off debt, splurging on a purchase, and putting the money into savings all got 17 percent each.

More than likely, those lower-to-middle wage earners are going to pay off their debt with their returns, even though that doesn’t always mean they will be financially stable in the long run. This group — those making $50,000 or less annually — was more likely to pay off debt or save their returns, but 10 percent of them were looking to spend their returns on a vacation. More than 7 percent were actually going to spend their cash and 5 percent were even planning on making a major purchase, like buying a car or a home.

Budgeting & Saving, News

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Article last modified on June 5, 2017. Published by Debt.com, LLC .