Tax refunds: While many taxpayers are not looking forward to a refund, there are millions who will get this windfall in 2017. During 2016, the average refund was $2,860 and a recent survey suggested this year the numbers may be similar. However, what may surprise you is the way taxpayers intend to use their 2017 tax refunds.
Number one on the list
Many of us think getting out of debt is a top priority for most people. However, surprisingly enough, more people anticipating a refund in 2017 put saving money as a priority. In fact, more than one-third of the people surveyed this year by GoBankingRates intend to put their tax refund into their savings plans. This is good news because most Americans have a terrible savings record.
Paying down debt surprises
You would not be alone in thinking those who are in the lowest income brackets would be more likely to splurge or save money when they get a tax refund. Interestingly enough, however, the lower the income bracket, the more likely taxpayers are to use their refund to pay down debt. This is a good strategy, regardless of your income because it allows you more flexibility to save for retirement, plan for college or save for the down payment on a new home.
Taking a break from everything
Perhaps one of the most revealing parts of this survey was those who are in upper-income brackets – these taxpayers are more likely to use a tax refund to fund a vacation. Keep in mind, these are likely taxpayers who have strong cash reserves, little debt and have already funded their retirement account.
The Surprise by Millennials
During the 2016 tax refund season, more millennials splurged with their tax refunds. However, this years study held a real surprise: millennials will be splitting their refunds between savings and paying down debt. This varies slightly by age group insofar as those between the ages of 35 to 54 are likely to pay down debt while those between 18 to 24 are more likely to save their refund. This is a positive development since these are the people who are more likely to have college debt and have lower savings account balances.
Since the economic outlook seems to be strong, taxpayers are feeling better about the use of their tax returns this year. Whether you are considering paying down your debt or you are interested in developing a better savings plan, contact TetonPines Financial today and let us help you get on track to a more stable financial future.