Washington, DC – (RealEstateRama) — More than one-fifth (21 percent) of Americans plan to use their expected tax refund to pay down or pay off debt, while under 10 percent will use the money to pay everyday expenses. The millions of adults who will use their tax refund in this way underscores the fragility of finances for millions of Americans, particularly for those who have the lowest incomes. The results are from the third annual consumer financial capability household survey from NeighborWorks America.
While 8 percent of adults overall said that they would use a tax refund to pay everyday expenses, 19 percent of people with annual incomes below $20,000 plan to use a refund this way, and 14 percent of millennials (18-34 years old) will use their refund for this purpose.
The need to stay on top of everyday expenses may cause the lowest-income Americans to short-change their financial future. Approximately 28 percent of people in the survey overall said that they would use a tax refund to ‘save for the future,’ but just 11 percent of workers earning less than $20,000 said that’s how they would use a refund. One third of millennials said that they would use a tax refund to save for the future.
How a person plans to use a refund seems to be linked to how they see their day-to-day finances and their ability to plan for future financial goals. When asked about their most important financial goal, more than one in four adults (26 percent) said that paying bills and everyday expenses was their overall top money goal. That compares to 49 percent of people earning $20,000 or less who said paying bills was their top financial goal.
This data reinforces the decision by NeighborWorks America to strengthen its financial coaching training programs, and partnership with the NeighborWorks network to develop new alliances with employers and other community development organizations to bring more financial counseling to lower income families.
The most recent counselor training course from NeighborWorks America is specifically aimed at building the financial capability of older adults, a population expected to grow 20 percent by 2030, or to greater than 132 million people.
*The telephone survey was conducted of a nationally representative sample of 1,000 U.S. adults. The survey has a total cumulative sampling error of +/- 3.1% at the 95% confidence level. Conducted by Finn Partners, March 10-14, 2016.