What will you do with your tax refund? We hope you have something fun in mind, but a new survey suggests that you might use it to pay bills instead.
The Center for Financial Services Innovation (CFSI) recently released baseline survey results for their U.S. Financial Health Pulse, a study designed to assess and track the overall financial health of America’s households. The study assesses the spending, saving, borrowing, and planning habits of Americans, dividing us into three categories.
Most Americans (55%) are “Financially Coping.” They struggle with some financial issues but are doing well in others. Another 28% are “Financially Healthy,” following a financial strategy that makes them resilient and able to handle financial setbacks.
The remaining 17% are “Financially Vulnerable,” struggling with almost every aspect of their finances. Within this group, almost 8 in 9 Americans (87%) used their tax refunds to pay bills – suggesting their expenses regularly exceed income.
Spending data backs up this claim. According to the survey, 46% of the financially vulnerable spend about as much as they make every month – and another 40% spend either a little more or much more than their income. Only 14% in this group aren’t living paycheck to paycheck, and 2 in 5 are falling further behind each month.
Other survey indicators paint the same grim picture for the financially vulnerable. Three-quarters are not confident they have sufficient long-term savings, and almost half (45%) only have enough savings to get by for less than a week. 81% have unmanageable debt loads, and 73% rate their credit score as fair or poor. You can check your credit score and read your credit report for free within minutes by joining MoneyTips.
It’s not just the financially vulnerable who apply tax refunds to bills. In the financially coping group, 59% paid bills with tax refunds, as did 39% of the financially healthy group.
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