“Well if it’s a lot I’d take a nice trip.”
“I’m gonna spend it on my daughters.”
“I’m probably going to save it. Maybe put it into stocks.”
“I’m gonna buy a lot of clothes.”
These sayings ring through the air during tax refund season, and the IRS will issue millions of refunds this year.
If the past is any guide, those refund checks on average will total close to $3,000.
One thing to consider is what most economists will tell you. If you have credit card debt, use that tax refund and pay it off.
“So you actually want to pay off your debt first because its high interest then your mortgage and then set aside some cash,” Teresa Ghilarducci, professor of economics, said.
Ghilarducci said people should also look at their current spending and cut back.
Morgan Stanley’s David Reiser, one of the nation’s top money managers according to Barrons, says keeping a reserve is equally as important as paying off debt.
“At least three to six months of reserve protects you in case you lose your job or any other down turn,” Reiser said.
A recent survey found most people plan to use their refund to splurge on a new TV or vacation before adding to their savings accounts.
Right or wrong, it’s your cash.