What Did Savers Do with Their Tax Refunds?

February may only have 28 days, but Savers took advantage of every single one in 2018. Sixty-three percent of refunds received by Savers were received in February, and the subsequent flurry of banking activity provides clues into what Savers did with that money.

For Savers receiving refunds in February, the combined amount of saving and spending was up 95% versus only two percent for the entire SaverLife population. In fact, transfers to savings accounts were up 191% during the month, which averages out to $1,296 per Saver, or 48% of refunds received, and is consistent with the increased savings account balances noted here.

February refund recipients also used the influx of funds to “catch up.” In looking at February spending versus the average of the prior three months, the data shows a 53% increase in utility payments, a 61% increase in credit card payments, and a 43% increase in telecommunications payments. Payments to municipal government departments, such as the DMV or city revenue departments, increased by 87%. And while spending on automobile maintenance only increased by 10%, this is significantly different from the overall population, where spending in the same category fell by 20%.

SaverLife also found a 98% increase in healthcare and healthcare-related spending, which is consistent with the findings of a recent JP Morgan Chase Foundation report showing that healthcare spending spikes after the receipt of tax refunds.

Savers also allocated money to discretionary categories: spending on arts and entertainment increased 153%, while spending on gyms, health clubs, and fitness increased 48%. Spending in these categories is small as a percentage of overall spending (the recreation category typically accounts for about 1% of spending), but the increases show that while Savers boosted their savings and put their financial houses in order, they also allocated some funds to things they enjoy and that provide meaning.

Erica from Georgia, is one of many Savers who has big plans for her refund. She said that “most of our money is going towards medical expenses for our oldest son, and the rest will be for my education - I am in my last semester of school. Being so young we want to show our children anything is possible no matter what.”