What do People Plan on Doing with Their Tax Refund?

By  GOBankingRates, Special for  USDR

According to the latest survey conducted by leading personal finance website GOBankingRates.com, three out of four Americans expecting a tax refund this year plan to save the money or use it to pay off  debt.

For more insights on the survey findings,  visit:

Using a Google Consumer Survey, GOBankingRates.com asked 5,000 respondents, “What do you plan on doing with your tax refund?” The response breakdown is as  follows:

  • I do not receive a tax refund — 30%
  • Pay off debt (loans, credit cards, etc.) — 27%
  • Put in savings — 25%
  • Put toward a vacation — 9%
  • Make a major purchase (car, home, etc.) — 5%
  • Splurge on a purchase (TV, shoes, etc.) — 4%

The answer choices were displayed randomly, and respondents were limited to one response each. The percentages above and all further survey analysis excludes the 34.8 percent of respondents who chose “none of the  above.”

“Tax refunds are income that falls outside of Americans’ typical paychecks, so even though it’s earned and well-deserved, there is definitely a temptation to view it as ‘free money’ that can be splurged or even wasted,” said Elyssa Kirkham, the lead GOBankingRates finance reporter on the  study.

“It’s really encouraging to see, however, that most people are planning to use a tax refund to better their financial situation by saving or paying off debt,” she said. “Using a tax refund this way will buy the taxpayer more financial security and peace of mind, instead of a one-off splurge that soon loses its value or is  forgotten.”

Additional  Findings:

  • Only one in five Americans plans to spend tax refund money.
  • Older respondents are twice as likely to not expect a tax refund as their younger counterparts.
  • Respondents ages 18 to 24 are over twice as likely as baby boomers to splurge or make a major purchase with their refunds.
  • Of those expecting a tax refund, women selected “pay off debt” 20 percent more frequently than men did.

Methodology: GOBankingRates conducted this poll through a Google Consumer Survey from Dec. 30, 2015, to Jan. 1, 2016, and collected 5,000 responses. The poll posed the question, “What do you plan on doing with your tax refund?” and allowed respondents to select one of the following responses, which were displayed randomly: “I do not receive a tax refund,” “Major purchase (car, home, etc.),” “Pay off debt (loans, credit cards, etc.),” “Put the money in savings,” “Put toward a vacation,” or “Splurge on a purchase (TV, shoes, etc.).” The answer option “none of the above” was displayed last. This survey is representative of the online U.S. population with a margin of error of 1.8 percent. Analyses based on gender and age were only conducted on answers from respondents for which the relevant demographic data was  available.

About  GOBankingRates

GOBankingRates.com is a leading portal for personal finance and consumer banking information, offering visitors the latest on everything from finding a good interest rate to strategies for saving money, investing for retirement and getting a loan. Its editors are regularly featured on top-tier media outlets, including U.S. News & World Report, Forbes, Business Insider, Daily Finance, Huffington Post and more. It specializes in connecting consumers with the best financial institutions and banking products  nationwide.

SOURCE  GOBankingRates

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