A tax refund isn't free money.
You didn't just walk down the street and have a tax refund drop into your lap. You selected the amount you wanted withheld, it turned out to be more than you would've paid in taxes and now you have it back. It's still money you've earned, and it's still money that can go to toward just about any purpose you'd like.
The IRS expects more than 70% of taxpayers to get tax refunds this year. Last year, 111 million refunds were issued, with an average refund of $2,860. That's about 111 million people whose grumpy uncles told them they were "giving the government a free loan," but that's also a whole lot of taxpayers who were handed a lump-sump paycheck all at once.
So what do you do with all that money once you've let Uncle Sam have it for safe keeping? Well, according to a Bankrate.com report, just 6% of you say you've going to splurge on a vacation or shopping spree. Given that the last recession was recent enough for people to still feel a bit guilty about conspicuous spending, we're thinking the "spend it" response is a bit muted.
Conversely, the folks who says they're going to save or invest it (34%), spend it on necessities such as food or utility bills (29%) or pay down debt (27%) may not be telling the whole truth, either. According to finance site NerdWallet, the average U.S. worker saves just around $2,500 a year. If the average refund is $2,860, people are either not saving it or they're letting the bulk of it serve as their entire year's savings.