According to ABCNews.Go.com, more than 70% of taxpayers will get a refund this year. And Boston.CBSLocal.com reports that the average tax refund was $2,860.
But how much of that extra money can you hope to attract?
Let’s Break It Down
If we look at what most taxpayers spent they’re refund on last year, you’ll find:
- 41% of refunds were put into savings accounts
- 38% of refunds were used to pay off debt
- 11% of refunds were put towards a vacation
- 5% of refunds were put towards a major purchase like a home or car
- 5% of refunds were used for small splurges, like new electronics
So how do you target those tax dollars from those looking to spend them?
Who Is Spending the 5%?
If it’s 5% that we’re after, who are these customers that are spending their refund this way? Let’s looks at the breakdown by age groups:
18–24: 7% splurged
25–34: 5% splurged
35–44: 2% splurged
45–54: 3% splurged
55–65: 8% splurged
65+: 10% splurged
Surprisingly enough, the 55+ often forgotten about market are the most likely to spend their refunds on small purchases. The good news is, there are great products to offer this age group, like SmartestHome™ technology—perfect for those who own homes and have extra money to invest in protecting their valuables.
This is a big change from last year, especially among the coveted millennial market. GoBankingRates.com advises that last year, younger people surveyed were most likely to use their refund on splurges, while this year, most millennials will choose to save those dollars, keeping consistent with the other age groups where only 5% treated themselves with this extra money.
Encourage the Splurge
To back up our findings, Huffingtonpost.com reports that millennials are the most likely group to save—at over 66% that will put their refunds directly into their saving account.
25–34 year olds are the most likely to pay off debts. But the good news is it looks like that’s not all they’re doing with the refund…
The 90/10 Rule
The 90/10 rule is this: If you save 90% of your refund, you can use 10% to treat yourself on a non-necessity. The same can be said of using 90% to pay off a debt.
While a huge portion of our millennial target market is going to use 90% of their refund to save or pay off a debt, they still might be looking for a way to splurge with the remaining 10%—or they might just need some encouragement to know it’s okay to treat themselves. They don’t have to be too responsible. Offer this age group smaller splurges that still give them that new product excitement, like Bluetooth speakers.
Wait ‘Em Out
However, while such a high percentage of consumers have every intention of being good and saving their refunds, GoBankingRates.com reports that nearly 70% of American’s have less than $1,000 in savings. This means that they may just be holding onto that refund until they see the perfect item to spend it on—meaning refund season might be longer than you anticipate.
The Takeaway
Your best market in tax season is still 18–24 year olds—but don’t forget about 55+ year olds either! And some taxpayers may just be holding onto their refunds until they see that perfect item they’ve been waiting for, so be sure to offer plenty of hot summer items all through the spring. You can find everything outdoor and recreational in Out. Fit.™
For plenty of ideas of what to offer every taxpayer age bracket, check out petra.com!