Study finds strategies to encourage 50 percent tax-refund saving

Study finds strategies to encourage 50 percent tax-refund saving

In a research paper set for publication in the journal Behavioral Science & Policy, a team of researchers including two from Washington University in St. Louis demonstrated that — by structuring the messaging in the right way — those taxpayers can be encouraged to save their returns for long-term needs or unforeseen emergencies.
Increasing savings at tax time

Increasing savings at tax time

Motivational prompts to save tax refunds and suggested savings amounts for the tax refund can increase saving among low- and moderate-income households, finds a new experimental study from the Brown School at Washington University in St. Louis.

How people trick themselves into overspending

It’s tax-time. For many people that means handing some hard-earned money over to Uncle Sam. But for others tax time is refund time. Theoretically, that refund is money you’ve earned as a part of your salary, and should be accounted for and spent like regular income. However, most people view it as “found money” and generally find a way to justify spending it on something they didn’t necessarily need. According to a professor of marketing at the Olin School of Business, people mentally credit their refunds to specific budgetary accounts to justify spending it on desirable luxuries. The result is people end up spending too much, making it harder to pay other, more essential accounts.