What do most of us do with our tax return?

Well, first we must understand where we stand and how others spend their money similarly or differently than us. Below, you will find different income brackets. Find the one in which you fit, and once you find it, scroll down to keep reading:

People with an annual income of $19,000 or less:

Spends approximately the most on housing (45%), food (19%), transportation (17%), health (8%), entertainment (5%) and pension and insurance (2%).

People with an annual income of $19,000 - $36,000:

Spends approximately the most on housing (64-34%), transportation (27-14%), food (24-12%), health (14-7%), entertainment (9-5%) and pension and insurance (9-5%)

People with an annual income of $36,000 - $59,000:

Spends approximately the most on housing (42-25%), transportation (21-13%), food (16-10%), pension and insurance (10-6%), health (9-6%) and entertainment (6-4%).

People with an annual income of $59,000 - $94,000:

Spends approximately the most on housing (31-20%), transportation (17-11%), food (13-8%), pension and insurance (11-7%), health (7-4%) and entertainment (5-3%).

People with an annual income of $94,000 or more:

Spends approximately the most on housing (31%), transportation (16%), pension and insurance (16%), food (12%), health (6%) and entertainment (5%).

http://money.cnn.com/interactive/news/economy/us-spending/

AFTER YOU FIND YOUR INCOME BRACKET: How are you doing percentage wise? This is important to know and calculate since it will guide you as to where your money is going. As Warren Buffett says, “Do not save what is left after spending, but spend what is left after saving.” Investing your tax refund can jump start your investments and double the sum in a matter of ten years if we expect an average market return of 7-10%.

The average refund last year was $3,034, and only 32% of those refunds’ recipients will use it for savings and investing. This $3,000 investment could turn out to be over $6,000 in ten years, assuming you don’t invest additional capital.

The biggest chunk of money taxpayers will use is toward their credit card debt, a smart decision in order to avoid piling of interest rates, but be careful. Even though this might seem like the logical choice, if you don’t have an emergency fund for a rainy day, you should have one in place in case you incur a medical bill or a layoff. Create one by investing your money in safe instruments; pay some of your credit cards. By contributing your tax refund to an investment account, one can watch their money grow whether it is for emergencies, retirement, a child’s college fund, or for future savings.

Written by:
Alex Lopez
Posted on:
July 25, 2017