If you’re planning on making a big purchase and using your tax refund to get it, you are not alone according to a new study by new SunTrust Banks, showing that 25% of Americans will be doing the very same thing. And buying it even before they get their refund.
When it comes to millennials (aged 18 to 34), the number looking to make a big purchase with their refund jumps to 36%, and 40% of Gen Xers (aged 35 to 44) will be doing some major shopping as well.
The season to spend and to save
Last year people who had a refund, received one totaling $2,735 on average. The study found that 60% are planning to spend half or more of their refund. Yet this number also suggests that saving is also a priority since many are planning on saving at least some of it.
For SunTrust this savings trend is a good one. “We know from previous research that 51 percent of Americans don’t have $2,000 on hand to cover an emergency,” said Brian Nelson Ford, financial well-being executive at SunTrust. “Tax refunds present a perfect time to quickly fund a confidence account that can be used for emergencies.”
Tips for managing refunds
What is your best bet when getting a lump sum of cash so you aren’t left wondering where it went? SunTrust suggests not spending it until you have it in your hand or bank account, this way if you don’t get hit with credit card fees if your refund is delayed.
Looking to save? Then have the money put it into your savings account, or even get some advice from a professional about how to invest it or pay off debt. Then again you might want to think about whether or not there are expenses coming down the pike that you might want to save for, like car or roof repairs.
Last, but not least, they suggest going with the 50/20/30 formula, which basically means using 50% to pay off debt, putting 20% in savings and spending 30% – this way you hit all the sweet spots.
The Sun Trust survey was carried out online by Harris Poll in the U.S, from January 10 to12, 2017. They queried 2,174 U.S. adults who were 18 years and older.