$,1741 Average Tax Refund: A Guide for Americans

According to the Internal Revenue Service (IRS), more than 25.5 million taxpayers have filed their returns, and the average tax refund is about $1,741. So, how do Americans plan to use this extra cash?

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America’s prudent financial strategy

Almost 30% of taxpayers want to put into savings, their tax refunds according to a finding from Bankrate because of economic uncertainties. Market Realist’s article says this demonstrates a wise financial strategy. Most Americans are now aware of and prioritize financial security and planning. Aside from savings, it was reported that Americans will use their tax refunds to pay debt except for the Gen Z who would rather use theirs to invest. Around 20% are planning for vacations, home renovations, and pleasure. Senior industry Analyst at Bankrate, Ted Rossman, supports this strategy of using tax refunds for home renovations, lessening debt, and savings.

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It’s also important to include leisure and enjoyment

A certified financial planner, Riki Cooke, recommends the “50/50” rule to efficiently use a tax refund. He suggested using half of the tax refund for prudent financial decisions such as emergency funds and debts and enjoying the remaining half. He says that there should be the inclusion of guilt-free spending in budgeting strategies to prevent burnout or resentment towards financial goals.

According to Market Realist, the choice of utilizing tax refunds depends on an individual’s financial circumstances and preferences. An individual may opt to receive the tax refund or adjust withholdings for larger paychecks throughout the year.

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