There’s one day out of the year to which most adults look forward with the same excitement that children do with Christmas. That day is when the IRS hands out tax refund checks from the previous year’s tax filing. In years past, this money was typically spent on things like paying off credit cards, buying new clothes or taking a trip somewhere exotic.
Not this year.
Research conducted by the National Retail Federation (NRF) and Prosper Insights & Analytics paints a much different picture for this year’s tax refund spending — or, in this case, not spending — activities. Those planning to put their refunds in savings comes in at the 48 percent mark, while 35.5 percent plan to pay down debt.
The numbers are down across the board when it comes to the 66 percent of consumers expecting to see tax refunds this year. Here’s the breakdown:
- Everyday expenses
- 2016: 20.9 percent
- 2015: 22.4 percent
- Major purchases (such as televisions, furniture, cars)
- 2016: 8.7 percent
- 2015: 9.2 percent
- Special treats (such as dining out, clothes, spa visits)
- 2016: 7.6 percent
- 2015: 8.3 percent
NRF’s president and CEO, Matthew Shay, commented on why consumers are choosing to save rather than spend: “Financial security continues to be top of mind for all Americans, and consumers are hanging onto their tax refunds tighter than ever. Consumers are leveraging their tax returns to build up their savings, but that’s good news in the long run because money saved today is money that can be spent down the road, particularly during the back-to-school and holiday seasons later this year.”
The still-turbulent economy may be the reason why so many consumers are being more careful with their returns this year.