I think sometimes people fall into this mindset of viewing their tax refund as ‘free money,’ or ‘found money’ and forget that they loaned it to the government who is simply returning it interest-free.
New York, NY (PRWEB) April 04, 2012
RoadFish.com men’s lifestyle and finance magazine today weighed in on the results of Capital One’s Annual Taxes and Savings survey, disclosing that more than a third of Americans who are receiving tax refunds this year intend to spend them.
Capital One issued a press release showcasing the results of their annual Taxes and Savings survey, which revealed that 33% of Americans are planning to spend some or all of their refund this year. The press release reports that the latest IRS statistics declare the average federal tax refund $2,913 for the 2011 tax season. The survey went on to reveal that 27% of Americans said they planned on saving part or all of their tax refund. 17% answered that they intend to pay down debt, and another 5% stated that they will be investing the money they get back from the government.
Mickey Konson, Managing Vice President for Retail Banking at Capital One Bank, is quoted within the press release as saying, “Most people are not factoring their annual return into their overall financial plan and long-term objectives. A tax refund is often seen as free money, which makes it very tempting to spend it right away, but it’s important to remember that the refund you’re getting back is your own money. Tax season is a good opportunity for people to plan ahead, with an eye toward their future goals and financial health.” The survey reveals that roughly 69% or Americans, or 7 out of 10, don’t calculate their tax refund or payment into their annual budget.
RoadFish.com’s Senior staff writer is quoted as saying, “I think sometimes people fall into this mindset of viewing their tax refund as ‘free money,’ or ‘found money’ and forget that they loaned it to the government who is simply returning it interest-free. This year more than ever, we need to spend or save our returns wisely.”
Laura Medigovich, certified financial planner and Vice President for M&T Bank’s Hudson Valley region, wrote an article for the Times-Herald Records, in which she states, “There is nothing like a tax refund to burn a hole in your proverbial pocket. Tax refunds can seem like found money, and for some reason we tend to think of found money differently, as if it is a bonus or reward and should be spent on indulgences.” Medigovich advises planning ahead, lest one’s tax return quickly disappears leaving financial goals unattended. She suggests several methods to keep a balance between saving, chipping away at debt, and indulging in something fun. One recommendation is splitting the direct deposit on one’s refund using IRS Form 8888, sending the cash into as many as three separate accounts for saving for short term goals, investing in an IRA, and checking account for quick spending. Another approach is the “3-bucket method,” dividing one’s refund into the three categories: a third goes to spending, a third to saving for short-term goals, and the last third towards retirement planning.
RoadFish.com’s Senior staff writer prefers to chip away at debt with tax refunds, stating, “It makes sense for me to put that money straight towards paying off debt, since in the long run the interest rates will end up costing me. I’d rather get rid of debt that will charge me interest before putting the money towards anything else. Plus, it helps keep my credit report score in good condition.”
The above-mentioned Capital One survey revealed specific places that Americans plan on spending the money they received in a tax return. A reported 8% will spend the money on vacation, 6% intend to purchase new clothes, 9% say they will put the money towards a major purchase such as a big appliance or car, and 28% plan on using the money for “everyday expenses.”
RoadFish.com is an online men's lifestyle and finance magazine targeted toward men in their 30’s and 40’s that have already attained a moderate level of success in life, and are striving toward more. It goes over current events of interest to this group, such things as exciting adventures, making money, consumer interests, hot chicks, and luxury items, as well as ways to make more and save more money. It is a publication owned by Purpose Inc.