Saving or Spending? What Do You With Windfalls?

by Kelly · 11 comments

in Money & Spending

I received this press release from ING DIRECT the other day.


New ING DIRECT Survey Reveals Majority of Americans Receiving a Tax Refund Intend to Use It to Pay Off Debt, Invest or Save

Wilmington, DE – As the tax deadline approaches, many Americans have refunds on their mind. While the arrival of a refund once meant a shopping spree to many, this year Americans are skipping the spring sales to boost their savings and eliminate debt, according to a new survey release by ING DIRECT. The results of the survey report that seven in ten (71 percent) Americans who expect to receive a federal tax refund for 2008 will not be spending, but saving it, investing it or using it to pay off debt.

In these difficult economic times, Americans are also banking on their refunds to put food on the table and pay bills.  More than half (51 percent) of Americans expecting a federal tax refund this year said they are using their federal tax refund to cover basic household expenses, including an alarming 65 percent who are under the age of 35.

“Although Americans are often encouraged to spend their refunds to help stimulate the economy, Americans are choosing to save themselves first.  They strongly believe their top priorities are to stimulate their personal finances and keep the lights on at home. Americans are scaling back and they are doing their part to become more financially responsible citizens,” said Arkadi Kuhlmann, President of ING DIRECT USA, the nation’s largest direct bank. 

With uncertainty in the marketplace, Americans are doing their best to make do and save more money. The ING DIRECT survey also found:

  • Almost half (46 percent) of Americans between the ages of 35 to 54 who expect to receive a federal tax refund this year intend to use it to pay off debt;
  • One in four Americans expecting a federal tax refund (27 percent) plan to save their refund and one in three (39 percent) will pay off debt with their refund this year;
  • For Americans who owe taxes this year, 43 percent stated that they will dip into savings to pay Uncle Sam.

I found there to be a few really interesting points to this press release.

First, that more than 50% of Americans (65% for people under the age of 35) will be using this refund to pay basic bills, in other words, just to survive.

That more than 70% of people who receive a refund won’t be spending it, but will instead be using it to pay off debt or putting it towards savings is encouraging in the sense that people are starting to realize the necessity of saving.

Finally, the point that Americans are trying to become more financially responsible in general is applicable not only to Americans but to people in general. Almost Frugal receives a lot of visitors from around the world, and I see the same desire to save money and learn about frugality from the international visitors as the North American visitors.

This press release was for the American market, but the trends apply to all. Will you be receiving a windfall in the near future? What do you plan to do with it: spend it or save it?


1 Amanda March 30, 2009

We actually received a pretty good refund this year and ended up putting almost all of it into savings. Most will stay in savings, but some will be used to pay for the room we just added to our house.

We try to put at least half of any refund that we get into savings, usually more.

Amanda´s last blog post..Sophie’s Heart by Lori Wick

2 Nancy March 30, 2009

Our refund is minimal this year (less than $50) but it will be going into our fund to purchase a new dishwasher ~ a necessity in our home as our old one is barely limping along. Sound familiar? I remember your dishwasher purchase just recently.

Nancy´s last blog post..Menu Plan Monday

3 Kika March 30, 2009

After tithing on it, it will be used to pay off our mini-van which we used our credit line to purchase.

4 neimanmarxist March 30, 2009

our refund was big this year because we were married last year, and filed as a married couple- that meant we paid taxes as if single all year and got all that money back. That was nice. We paid of our last credit card with the big (federal) refund and are using the small (state) refund to go to some weddings this summer, a luxury we couldn’t afford. we wish we could save the money, but we feel it’s important to be there for our friends and want to be there to support them.

5 Heather March 31, 2009

We filed back in February, and as like most years, we got a huge refund this year. And although our original plan had been to put it into savings to put toward the big vacation we were planning to take to Australia in the fall (it’s close to us – we’re in Japan)… instead we sat down and discussed NOT taking that vacation, liquidating our saved vacation funds, and paying down debt. And so we did. It was probably one of the most mature financial decisions we’ve ever made in the seven + years we’ve been married.

Heather´s last blog post..Another Facebook Survey

6 Debbie March 31, 2009

We put most of it into savings and take a tiny bit $30-40 each and buy a treat for ourselves. I’m using my bit of money to purchase some high quality stationary. Small luxury I will enjoy. My husband will probably go out an buy a vinyl record or two.

Debbie´s last blog post..Back to Work I Go.

7 marci357 March 31, 2009

It’s big and it’s all going into savings.

8 Abigail March 31, 2009

I like the advice that strikes a balance: You get to spend 10% on something frivolous and throw the rest at savings/debt. This allows you to feel slightly indulged, but still be responsible.

Abigail´s last blog post..Carnivals, now and later

9 Kelly March 31, 2009

Sounds like most people will be saving their refunds! We get tax refunds in August in France, but I already know that we’ll be stashing ours away too.

And Nancy- good job saving for the dishwasher *before* you need to buy one!

10 Tanja March 31, 2009

Mine will firstly fill up my basic emergency fund (500 euros), then I’ll split the rest between my debt and my new computer savings (old one breaking down, will last a few months longer though, so saving for it will fix that problem). I’ll get some more extra money that I’ll treat the same.
On top of that, the company I work for ‘sponsors’ new computers, so if I buy one, they’ll give me a certain amount back. I will make sure I have enough in savings to buy it myself, and the ‘refund’ will then either go into debt (if I still have it then, I expect not, it’s only a small debt now) or savings.
I have not yet decided if I want to spend 5% or 10% on ‘instant gratification’. I might.

11 Jenny April 5, 2009

With our tax return, we paid off our trailblazer loan and stashed the rest in savings. Most of the remaining amount will be used to fund our upcoming adoption and a small portion will be used to fund our adventure race entry fees that we like to do in the summer.

Jenny´s last blog post..~ Mercy Me 5K & Easter Egg Hunt ~

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