UA students spend, save tax returnsBy Alexandra Ellsworth | 04/14/2014 11:00pm
With tax season coming to a close, students may find themselves with extra cash burning in their pockets. While most part-time jobs might not produce a high return on taxes, students could be faced with a decision on their tax returns: spend or save?
Jan Brakefield, a professor in the department of consumer sciences, said she recommends students save what they get back from their taxes.
“Don’t blow it,” she said. “It’s going to be different depending on each situation, but if a student doesn’t already have an emergency fund set up, I recommend that they get one.”
Brakefield said it is important to have at least three to six months worth of living expenses saved up.
“If a student is still relatively dependent on his or her parents, then they may have a smaller emergency fund then say a student who completely financially independent,” she said. “It’s a good idea to have that cushion in place, though, because you never know when an emergency will happen, and money back from a tax return is a great time to set that up.”
If a student does have a savings account already in place, then Brakefield said she thinks it can also be good to look at what aspects of a student’s life need to be improved. She said, for example, if a student needs a new laptop, putting tax-return money toward it may be an efficient use of funds.
Students should be thoughtful and smart about their spending, Brakefield said.
“What is not a good idea is a weekend at the beach or a new designer outfit that may be worn only once,” she said. “Recognizing that it is important to be financially responsible now really goes a long way in the future. Saving money and budgeting spending will give you a lot more confidence.”
(See also "Raise tax revenue, reduce debt by cutting taxes")
Students had mixed responses about their plans for extra savings, though. Lila Saylor, a junior majoring in civil engineering, said she plans to save hers.
“I use the money I make from co-oping to save and pay for the next semester,” she said. “I just plan on putting my tax return toward that to help pay for school and living expenses next year.”
Because Saylor makes a significant amount in a concentrated amount of time, she said she has to budget how she uses her money when she is back on campus.
“I wish I could do something cool like go to another country with it, but it’s just not practical,” she said. “I try to stick to a budget, but it’s definitely hard, especially when I hang out with people who don’t have to budget.”
Lauren Zezulka, a first-year graduate student in criminal justice, said she is considering doing something a little more fun with her return.
“I may get a cat,” she said. “But if I don’t, the money will go into my savings account.”
Zezulka’s tax return increased from last year, and she said she is excited to have the extra savings and to be able to treat herself with it. She said this is the first year she has had to budget her money.
(See also "Students find aid as tax day looms")
“I opened my first personal savings account and am regularly putting money into that to help pay for school,” she said. “I am not much of a planner, so it’s been hard. I am trying to use as little of my finical aid money as possible to lessen the debt after graduation.”
Keith Edwards, a senior majoring in public relations and political science, said he has tried to compromise between spending and saving. The majority of his return, which totaled just under $1,000, will go toward the security deposit on an apartment in New Jersey, where he will be moving for a job after graduation.
“I would say save as much as you can, but I also don’t see a problem spending a little,” Edwards said. “I took about $100 out to spend on things that I didn’t really need, but the rest is in savings.”
Not all students receive as much back as Edwards, though. For some students, the total on their return could even be under $10, as it was for Cheston Istok. Istok, a senior majoring in political science, received $6 back on his return.
“Yeah, I didn’t get much back this year, so I will probably do something fun with it,” Istok said. “I may go try out Taco Mama or go to Chipotle.”
Istok said he will just put the $6 into his weekly budget for food. He said he sees tax returns as treats.
“I see it as separate from what I usually put toward my savings, so even if I had gotten more back, I would probably still spend it,” he said.
(See also "Class allows students to provide free tax prep")