This year, tax experts say about 80 percent of people filing taxes will get money back. Many people already know what to do with that cash, even before it comes.
“As you think about receiving this refund this year, we recommend certainly, don’t spend it until you actually receive it,” says Brian Nelson Ford, with Suntrust Financial. “That’s a good thing. Until it arrives.”
According to a Suntrust Bank survey, 22 percent of what Uncle Sam gives back will go towards travel and entertainment. 18 percent will go towards things like groceries and clothing. 13 percent will be spent on home improvements.
The majority of the money will go towards savings and paying off debt.
“This may be the year where consumers give themselves a little bit of breathing room and increase their short-term savings which is a good thing,” Ford says. “We know from previous research about half of Americans would have difficulty coming up with $2,000 in emergency. And this is a great time to break that statistic.”
To simply save, immediately move your refund out of your checking account and into your savings. That way, you aren’t tempted to splurge.
“Look, there’s nothing wrong with spending a portion of it on yourself,” Ford says. “That’s an okay thing. But let’s get that savings beefed up. Let’s reduce a little bit of that debt.”