Off-the-topic: Common ways that Americans spend their tax refunds

Most of us have a love/hate relationship with tax season; not only do you have to gather various paperwork from all your taxable expenses, but you’ll be asking yourself the inevitable question, “how much will I get back this year?” We spend time sifting through a year’s worth of paperwork, expense reports, tax write-offs, and just about anything else that will help us get our maximum return. Whether you admit it or not, there’s always the lingering question of what you plan to do with the money you’ll be receiving.

By now, you should’ve filed and (hopefully) received your tax refund. If you’re like 42% of Americans, you plan on paying down debt, stashing it all in your savings account, or catching up on everyday expenses. There are, however, a large portion of us who spend our refunds in a – shall we say – less responsible way.new

According to USA Today, “Around 12% of taxpayers who received a refund check spent it on some sort of vacation.” Rather than saving up over the course of the year, these individuals view their refund as their vacation savings. If all other expenses are in order, then we can’t help but ask, “Why not?” Rewarding yourself or your family with a nice trip might be the most refreshing way to reflect back on a year’s worth of hard work.

Unfortunately, there are the resounding few that have no intentions of making the most out of their tax returns. Here is a list of the worst possible ways that Americans can (and do) blow their money.

  1. Gambling

USA today states that, “the Nevada State Gaming Control Board reports the win percentage odds for craps at around 13.5%, and three-card poker, at around 31%. Slot machine win percentage odds are even lower, with win percentages that are generally less than 10%.” This doesn’t sound like the best way to invest your hard-earned cash. Your entire refund could be gone within one trip to your local casino.

  1. Shopping

Let’s face it – whether you plan to save your tax return or not, there’s always at least one item that you contemplate indulging on. In fact, about 7% of Americans admitted to splurging or going on shopping sprees with their tax returns. That’s an alarming number! Are you one of the seven percent?

  1. Large and out-of-reach purchases

It’s not every day you get a large chunk of money deposited into your bank account (aside from your usual paycheck), so it’s no wonder that Americans feel the need to put this towards a larger, more desirable purchase. Cars, home improvement projects, and possibly plastic surgery are among these out-of-reach purchases that we’d typically steer clear of. But once we see that “extra” money in our accounts, it’s sometimes too hard to pass up.

In the end, you will want to make sure you are using your tax return money the right way or for the right reason but of course feel free to use it as you please.  By using some thorough planning and self-control, you are sure to make the most out of your tax refund this year. Whatever you decide, make sure you will be completely content with your investment – it only comes around once a year!

Sources:
USA Today, http://www.usatoday.com/story/money/personalfinance/2015/02/28/cheat-sheet-poor-ways-to-spend-refund/23993653/

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