The index’s February survey found that 78% of middle-class Americans (household incomes of at least $50,000) who have received, or expect to receive, a tax refund plan to put those dollars toward savings and investments, prepaying major bills, or debt reductions.
Most Americans won’t be spending that refund on a vacation to the Bahamas or other non-essential items. The survey found that 27% of respondents will spend refund dollars on a vacation, dining out, home improvement, or other consumer purchases.
Americans with a financial plan are more likely to use their tax refund for general savings (44%) than those without a financial plan (35%). Meanwhile, Americans without a financial plan are more likely to use their tax refund to pay down debt (44%) and pay monthly bills (21%) than respondents with a financial plan (33% and 11%, respectively).
“Spending and saving wisely has come back into fashion during the current financial turmoil,” said Terri Kallsen, executive vice president of strategic development at First Command Financial Services, Inc., in a release of the results. “The time-tested values of prudence and self-reliance are moving us toward a healthier economic future. We are starting to understand the value of long-term gratification for retirement dreams.”
The First Command Financial Behaviors Index is a monthly survey of approximately 1,000 U.S. consumers aged 25 to 70.