A new study indicates that, even with the economy improving, the average American consumer is still keeping a tight hold on the purse strings. More Americans than ever are foregoing the yearly splurge and plan to save their tax refunds.
Highest percentage in study history
Last week, the National Retail Federation released the findings of its survey of 8,700 American taxpayers. When asked what they intended to do with their tax refund, 44 percent said at least part of the money was earmarked for savings. That is up 2 percent from last year and is an all-time high for the nine-year-old annual survey.
Matthew Shay, president and CEO of the NRF, wrote in a statement:
“After a rocky few years, consumers are now more vigilant about how they spend their money and the importance of preparing for future financial stability.”
No time to splurge
The amount of consumers planning to use their refund for some kind of splurge purchase was down. That number was only 12 percent this year, as opposed to 13 percent in 2011.
How it breaks down
Of the taxpayers surveyed, 11 percent said they plan to use the money to take a vacation. About 29 percent said they planned to use it for normal daily expenses. Forty percent indicated that they plan to use at least some of the money to pay down old debts.
down payment on a house
According to the NRF study, about two-thirds of all taxpayers will get a refund this year. The average refund was more than $3,000 in 2011. It is not hard to see that, if saved, tax refunds can add up in a big way over just a few years.
Celeste Simmons, a 39-year-old single mother in Kennesaw, Ga., told CNNMoney:
“I will never use my tax refund as spending cash again. I realized I was behind so I started saving 100% of it four years ago and now I’ve accumulated enough for a down payment on a house… There is no other time of year that I have to get ahead.”
More taxpayers filing themselves, early
The study also said that more than 64 percent of taxpayers plan to file before February 29. Only 14 percent of taxpayers surveyed said they planned to wait until April to file.
Also, the study found, more consumers plan to prepare their taxes themselves and save the cost of a tax pro.
Separate study concurs
TD Ameritrade conducted its own tax refund survey and found that a full 63 percent of those surveyed intended to put at least some of their refund into savings. That study polled about 1,000 taxpayers.