With the 2018 tax filing season full steam ahead, one question posed for most Americans expecting any type of tax return is, “What should I spend it on?” While some people may choose to spend their return lavishly on themselves or their loved ones. Others may choose to be more conservative with it, using it to tackle any debt or help bolster their savings.
According to a survey by Credit Karma, 62 percent of Americans are expecting a return of some sort. Of that, 50 percent already know how they will be spending it. As American’s have been known to be careless with their finances, the results of the survey are promising. The results as listed:
- 20 percent plan on putting the money in a bank account or an emergency fund
- 18 percent plan to pay off credit card debt
- 16 percent plan to pay off other debt
- 11 percent plan to use it for a vacation, travel or major event
- 10 percent plan to save it for a major purchase (home, car, boat, etc.)
- 6 percent plan to buy something for themselves
- 6 percent plan to put it towards student loan debt
- 3 percent plan to pay off medical debt
- 3 percent plan to put it into a family member’s bank account
- 2 percent plan to buy something for their spouse or significant other
It’s good news to see two-thirds of the survey respondents planning on using their tax return to either bolster their savings or to attack debt head-on. According to the Matthew Frankel of the Motley Fool, the most constructive ways to use influx cash, like a tax return, would be to use towards:
- Contributing towards an emergency fund
- Paying off high-interest debt, such as credit cards
- Investing or saving it for the future
- Paying off lower-interest debt such as mortgages and auto loans
It’s also worth remembering that your tax return isn’t just some bonus you are eligible for. This is money you already earned that was withheld from your paychecks during the course of the year. Ask yourself, would you take a typical paycheck you received and spend it all at once on a vacation or major purchase?
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