Ahhh it’s that time of year again — tax season. Those who typically owe money dread the thought of April 15th, but those who get nice returns look forward to getting some extra cash in their pockets. So we asked, and you answered: What did you do with your tax refund?
According to a survey released by the National Retail Federation, 63 percent of Americans will receive a tax refund. About 70 percent of those people will either save their refund or pay down debt. We decided to ask real women what they typically do with their tax refunds to see if our results matched the national average. Take a look — you may be surprised!
What did you do with your tax refund?
“My husband and I weren’t expecting a refund, so we decided to purchase a new couch we’d had our eyes on for months and save the rest. The couch was a “splurge” for sure, but we love it!”
– Sarah C.
“We paid off debt that had interest (interest-free we did not) and put the rest in savings.”
– Angel A.
“Debt, savings, reward of some kind (shopping, kids’ camp, etc).”
– Erica J.
“Booze! I mean… I invested it all into my high-yield Roth IRA.”
– Nadalie M.
– Amber P.
“Goes to summer vacation.”
– Megan C.
– Leandra H.
“Car repair and maintenance.”
– Ashley P.
“A small amount towards a treat (lululemon?!) and the rest in savings.”
– Shelley G.
“20 percent on something fun, like a family vacation, the rest in savings.”
– Tina O.
“Credit card debt.”
– Kristell P.
“We stick all of it in savings. Typically, we owe, so if we ever do get any money back we prefer to save it in case we owe next year.”
– Cathi C.
“Bills or vacation!”
– Christina M.
“Paid off debt.”
– Michelle G.
“Put it on my credit cards.”
– Gabi V.
“Put it in savings.”
– Victoria V.
“I usually buy one thing I’ve been wanting and use the rest to pay down debt.”
– Mandy C.
Smart things to do with your tax refund
Our results match that of the U.S. pretty accurately. Most people choose to save at least some of their refunds and maybe splurge on one or two items. Other smart things to do with your tax refund include:
- Open a 529 savings plan for your children
- Increase your emergency fund
- Pay extra towards your mortgage
- Purchase something you’ve been putting off (new tires, pet dental work, home improvements)
- Invest the money
- Pay off a high-interest credit card
- Open up your own business
- Donate to your favorite charity
Did you know?
The average tax refund in 2012 was $2,803, according to the IRS.
Of course, what you decide to do with your tax refund is ultimately up to you, but it’s always best to have a plan. If you put the money in your checking account and let it sit until something comes up, it will most likely be spent on frivolous items until it’s gone. There’s no right or wrong way to spend your refund, just make sure you have a plan. After all, you’re the only one who can budget your money and tell it where to go.