What tax refunds are saying about our improved economy
Bottom Line: When you don't have money and are struggling to get by what are you most likely to do when you come by a lump sum of money? Historically people have been inclined to buy essentials and spend the rest on something they've really wanted but couldn't afford. When people are generally doing better and come by a lump sum of money they typically do something responsible with windfall. With all of that in mind here's what GoBankingRates found with regard to those receiving tax refunds this year.
43% are saving/investing the tax refund
33% are paying down debt
10% using it on a vacation
5% will make a major purchase
Speaking of better financial management there's another tell in this story. They found that a third don't expect to get a refund. That's the most encouraging news of all! Getting a tax refund, save one-off very specific circumstances, indicates poor financial management generally. It's encouraging to see that a third are evidently engaged in better tax strategy realizing the benefit of the money they've earned throughout the year rather than allowing the federal government an interest free loan. So, by the time we account for 33% of adults managing taxes effectively and 76% of those who are receiving refunds using the money responsibly we have a couple of positive takeaways. First, we're becoming more responsible stewards of our finances. Second, the improved economy has clearly reached the average American's wallet.