You got your Refund, Now What?
You got your Refund, Now What?
Tax Day has come and gone and now many Americans are anxiously awaiting their refunds. While a vast majority of Americans have already received their state and federal income tax refunds (with the exceptions being those that were late filers). With that extra cash now padding their pockets it’s assumed that many Americans will see it as an opportunity to go make some frivolous expenditures. However, a recent study conducted by Credit Karma Tax is telling a different story.
Paying Off Debts and Planning for the Future
Overall with a vast majority of Americans are going to be using their money wisely and are thinking ahead with their refunds.
Rainy Day funds for themselves of a family member: Approximately 23% of Americans responded that they planned on putting it in their bank account or a rainy day fund. Considering that 57 million Americans have no emergency savings, that is a very wise move to make. Often times when individuals do not have an emergency fund, they will dip into their retirement funds which incurs penalties and puts them in a tougher spot when retirement rolls around.
Pay off credit card debt: 18% of those who responded said they would pay off credit card debt.1 Considering that most all credit cards have very high interest rates, this is also a very good idea. According to an analysis by NerdWallet conducted on 2017 household debt, the total credit card debt owed by US consumers equates to $931 billion, with the average US household carrying approximately $15,983 of credit card debt. While some households may have less credit card debt than this amount, it is still important to get out of this form of debt since the average card APR sits at about 16.15 percent.
Pay off other debt: An additional 20% of Americans said that they would be paying off other forms of debt, which varied between a mortgage, student loan debt, or medical debt.1
Saving for a major purchase: 10% reported that they were saving up to pay for a home, car or boat.1 Now while extra cars or a boat may not be the wisest thing to spend your money on, especially if you’re in debt, saving up for a down payment on a house is a very noble, and wise thing to do.
Others might want to rethink theirs
17% of respondents said that they planned on spending their refund on something for themselves, their significant other, or towards a vacation.1 While it is good to treat yourself every once in a while, financial stability and being debt free is a good way to ensure that you can treat yourself more in the future.
At the end of the day, your tax refund is a very welcome boost to your finances and can help you stay out of debt and prepare for a rainy day. Through proper planning and usage of your refund you can find yourself out of debt, prepared for the future or ready to make that big purchase.
If you have any questions on how you can properly prepare for the future, call us at GROCO today!
We hope you found this article about “You got your Refund, Now What?” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
To receive our free newsletter, contact us here.
Subscribe to our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.
Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
Have a Tax Issue With the IRS? You Could Always Take Them to Court
What would you do if the IRS makes a decision you don’t agree with? For example, let’s say you file a tax return and send it in expecting to receive a refund of $1,500. However, a few weeks later, instead of receiving your refund, you get a letter in the mail informing you that you…
Will Fewer Audits Lead to More Cheating?
There’s an old saying that cheaters never prosper. Of course, there are probably many people who have gotten away with cheating that would beg to differ. When it comes to taxes, however, it’s always best to avoid cheating. Surely, some people do get away with it, but if you ever get caught it could cost…
Could a Trust Be a Good Way for the Wealthy to Save on Taxes?
When you think of trusts, what comes to mind? While many people think of a financial account that is set up as part of an estate plan, there are a couple of little-known trusts that taxpayers, especially the wealthy, can use to help them save on their tax bill. These trusts are perfectly legal and…
How to Avoid Tax Preparation Scams
With so much to do and so many other important things to worry about, many people will be looking for help over the coming weeks and months with their income tax returns. While some people might just choose the first name they see to file their taxes, whom you choose can actually make a big…