Americans Plan to Use Their Tax Refunds Wisely -- and You Should, Too
Each year, the majority of people who file a tax return wind up with money back from the IRS. And getting that lump sum of cash can easily open the door to temptation, whether it's springing for a new gadget or taking the vacation you've been longing for. But before you blow that pile of money, consider the ways it could help improve your finances -- that's certainly what a large chunk of Americans are doing.
In a recent Offers.com survey, 21% of respondents plan to put their tax refund directly into savings. Meanwhile, 20% say they'll use that money to pay off debt. By contrast, only 5% plan to spend a refund on travel, while just 4% think they'll splurge on a purchase that's otherwise outside their budget.
If you're behind on emergency savings, it absolutely pays to use that money to boost your cash reserves. How do you know if you're behind? As a general rule, you should have enough money in the bank to cover a minimum of three months of living expenses. And for better protection, it helps to aim for more like six months' worth of bills in savings. If your current balance is nowhere close, then it pays to stash your tax refund in the bank.
Source Fool.com
