As of March 2010, the average tax refund has been just over $3000. While it may be tempting to spend that money the moment it hits your account, we propose a more thrifty approach.
Right off the bat, put a large chunk of your refund into savings. That may sound a bit like a line from Captain Obvious, but research shows that splitting your money will actually create a more frugal mindset. The basic premise is that a person is less likely to spend when they are forced to choose from various piles.
It's nice to have money in savings, but what about your personal debt? The average consumer carries 4 credit cards. Consider these facts:
- 2/3 of Americans own a credit card.
- 46% pay less than the full balance each month.
- 13% carry balances of $10,000 or more
- 11% charge more than they did last year
You worked hard in 2009. You deserve whatever refund the IRS gave you. We're just saying that it might be advantageous to put that money somewhere where you will not spend it.
