The majority of Americans (53%) plan to put their tax refund toward necessary expenses, such as student loans and credit card payments, according to a study from Edward Jones.
In addition, the survey of 1,004 Americans across generations, regions and income levels found nearly one-third (31%) plan to save their refund, and 6% plan to invest it. Only 9% plan to put it towards something fun, like a vacation or entertainment.
Millennials were most likely to save their tax refunds, with 33% indicating so, followed by Baby Boomers (31%) and Gen Xers (26%). Baby Boomers were most likely to spend their tax refunds on fun expenses (15%), followed by Millennials (9%) and Gen Xers (6%).
Other findings from the study show the presence of children in a household affected respondents’ allocations. Sixty-six percent of families with children chose to spend the majority of their tax refunds on necessary expenses. For those without children, 46% indicated they would do the same.
“Using the refund to pay down debt with higher interest rates, such as credit cards and student loans, is certainly recommended to help get your finances in order,” says Scott Thoma, principal and retirement strategist at Edward Jones. However, he adds, “The refund can be a great way to increase how much you are investing toward retirement to get your retirement strategy back on track as well.”