It is that time of year again, tax season! Many Americans have completed their taxes far before the 2017 deadline, April 18th. However, many Americans still have not. It wouldn’t be Tax Season without a few procrastinators, right?
According to the IRS, 83% of Americans will receive an average refund of $3,120 per tax return. One of the most well thought out financial plans are often about how one should spend their tax refunds. Should you go on a well-deserved vacation? Buy a new pair of shoes? Indulge in a Spa Day? How about paying some long over due bills?
Here at Money Masters, we decided to create a fun, simple questionnaire to discover how some people spend their tax refunds. We asked over 50 of our friends and family members their plans for their refund. Here’s the list in order of most popular responses:
1. Pay the mortgage/extra payment
2. College loans
3. Car repairs/car bills
4. Credit Card bills
5. Medical Bills
6. Spa Day
7. New wardrobe
9. Donating to charities
11. Save in an emergency cash account
12. Home improvements
According to our data, approximately 75% of the respondents said they plan on using their tax refunds to pay bills such as an extra payment on their mortgage, pay down their college loans and pay car repairs. Approximately 25% of the respondents said that they used their previous year’s tax refund to pay their bills, however this year they would like to use their tax refund for a vacation.
This decision should all depend on your current financial situation. We, at Money Masters, recommend you first pay off any debt and then second add to your emergency savings. You should plan out where the tax refund money is going and stick to that budget. Make sure you calculate how much you have spent to keep better track. Before you purchase those shoes you have been eyeing or booking that expensive exotic vacation, follow Walter the Vault’s advice:
Wait before you spend any money.
Ask yourself: Do I need it or do I want it?
Look to your friends and family for wise financial advice.
Think before you buy!
How do YOU plan on using your tax refund this year?
By Carmela Cavallo