Notice a smaller refund last year? You’re not alone. The average tax refund dropped by about 2%, according to the IRS. The upside? More people got them. About 95.7 million refunds were issued, a small increase from the 95.4 million released the year prior.
Even a slightly smaller refund left the average taxpayer with $2,725. So, how are millennials spending theirs?
*Spoiler alert: Most aren’t blowing their refunds on avocado toast.
Millennials and low-Gen Xers, ages 25 to 44, are actually the least likely to spend a refund on something frivolous, with only 2% choosing “splurge on a luxury purchase” in a recent survey.
So, what are they spending their refunds on?
Paying off debt
Millennials ranked 10% more likely to use the money to pay off debt than the general public. Student loan debt is now second only to mortgages as the most common form of debt in the United States. Throw in some credit card debt and it’s no wonder millennials are focused on being debt free.
Thanks to a movement towards non-consumerism, frivolous, big-ticket items aren’t at the top of the shopping list for the majority of millennials. What is at the top are everyday items that make life a little more convenient. Whether it’s finally replacing the refrigerator that only works if you kick the door twice, or fixing the heater in the car, necessities are one area millennials are prepared to spend.
Millennials came of age during the Great Recession, so they aren’t timid about investing. In fact, those between age 25 to 34 are more likely to invest their refunds than other age groups. They’re also more likely to stash their extra cash in a retirement savings account.
The experience-based generation famously loves to travel, so it makes sense that some of those refunds are stashed away for dream vacations, island travels, and the ultimate Kerouac road trip.
Millennials are opting less for Insta-worthy purchases, but there are still a few refund dollars that will find their way to designer stores before the end of summer.
Regardless of how you’re planning to spend your refund, TaxAct is here to make sure you get the best one possible.