BOULDER, Colo. –
Despite the current recession, many University of Colorado students still just want to have fun.
And many are planning to do just that with their tax refunds this year.
This could help stimulate the economy, but may not be the best decision for students, said Betty Jackson, a CU accounting professor.
Instead, Jackson recommends a checklist for students to determine responsible saving and spending.
“Meet your current essentials and pay down the highest interest debt you have and build up an ’emergency fund,'” Jackson said. “Splurge only after you have done those two things and have a secure source of income â that splurge will help the economy.”
Regardless, splurging is exactly what some CU students are planning to do next week.
“I am going to spend my tax return on spring break,” said David Kizer, a senior finance major in the Leeds School of Business.
Putting money away or paying off bills is not a concern for Kizer. In fact, he said he’s even willing to go into more debt for a fun spring break.
“If I don’t get my returns by break then I am going to use my credit card to pretend that I got it already,” he said.
Kali Morris, a CU junior and server at Chili’s restaurant, said she hopes to spend her refund on a trip to Italy over spring break. And other students are finding ways to spend freely without traveling.
“I plan on using my returns this year to take my girlfriend out on our fourth anniversary,” said Corey Anderson, a sophomore at CU.
Anderson agreed that most Americans should save, but said that students generally use their money to “go buy something nice.”
It’s this kind of luxury spending that will benefit the economy, Jackson noted.
“The individual is better off spending less, but the economy is better off if we spend more,” Jackson said.
Jackson said people should first think about their own situations before deciding whether to spend or save their tax refunds.
“There is no one prescription for all individuals,” she said. “I counsel individuals to look at their own situations carefully and truthfully.”
Morris said that students shouldn’t worry too much about saving.
“Most students probably don’t receive much back, so I can’t imagine they’ll think too much about saving,” she said.
Despite the students’ eagerness to spend their refunds on leisure, they seem aware of the personal benefits of saving during the recession.
“I think that people should spend their returns to pay off outstanding debt they have to avoid going into default on any of their bills,” Kizer said. “I think they should try and spend a little and save the rest.”
Kizer said he feels comfortable spending his refund because he has built up a cushion to fall back on.
“I have been making money in the stock market over the last year,” he said. “If I had been getting destroyed by the market like most people, I would save more.
“Having my parents’ support helps, but more important is that I have a job starting in a few months and know I will be getting a salary and not be unemployed.”
Experts seem to agree with Kizer that students without savings would be smart to save their tax refunds â even if they’re small â given the recession.
“I’d say that setting up an IRA with your tax return money would be smart,” said Dustin Ferguson, communications specialist for H&R Block.
While it looks like most college students still will be spending their refunds on recreational excursions, Jackson said she expects most full-time workers will not follow students’ leads.
“Bottom line â most people will not be spending any tax refunds freely,” she said. “Although historically people tend to look at tax refunds as ‘free money,’ most people are now too nervous about what the economy holds to spend carelessly.
“My prediction is that they will use most of the money to fund monthly expenditures they can’t otherwise fund, pay down debt or add to their savings,” Jackson said. “Many or most will only spend a bit on something ‘extra.’
“This is certainly a good step for an individual but will not stimulate the economy in the short run.”