That highly anticipated tax deadline is fast approaching. Hopefully you’re lucky enough to be among the 76% of Americans who expect to receive a refund during 2013. If so, have you thought about how you will spend your return this year? Perhaps a dream vacation? That big screen TV you’ve been eyeing? Or maybe you’re among the more cautious part of society that plans to put your refund to some better good, such as paying down debt, funding your retirement account or looking into charitable donations. Whatever your plans may be, you’re not alone. According to Yahoo!, it’s estimated that nearly $230 billion in federal tax returns will be issued during 2013!
According to Yahoo! estimates, the average refund will be approximately $2,700. That may seem like chump change to some, but to a recent grad, the thought of an extra two grand presents what seems like nearly endless possibilities. Admittedly, I will more than likely fall in the 22% of those who spend a portion of my return on personal expenditures. It’s estimated that of those in this grouping, the majority will splurge on electronics (40%), a dream vacation (30%), clothing/accessories (13%) or media and entertainment (11%). However, the accountant in me would like to think that I’m among those responsible enough to save my money or use it towards practical uses – like 44% of Americans who expect to use their return to pay down debt or other bills, or the remaining 34% who plan to put their hard earned money back into savings.
Regardless of where your intentions lie, it’s wise take a few minutes to think about the best uses for your extra dough and how that boost of cash can impact your life. According to a survey conducted on bankingmyway.com, 69% of Americans don’t consider their refund when budgeting their lives, but maybe we should. In fact, it was noted in Time Magazine that about 58% of people intentionally set themselves up for a tax refund. But why? Many Americans purposely increase their withholdings, in order to receive more money back with their return. As quoted in Time, “As illogical as it is, some people say the act of depositing a large sum of money into a banking account makes them happier than saving little by little, paycheck after paycheck”. Another big mistake people make, according to Time Magazine, is thinking of their refund as “free money” from Uncle Sam. Studies show that those who view their return as a gift often think differently about how they spend it and are often more careless.
As the deadline draws nearer, take a minute to think… what statistic will you be a part of?
*Thank you to Jessie Hale, Assurance Staff, for her contributions to this post.