Did you know the tax refund check is the largest income “windfall” for many households? Every spring this money shows up in accounts, some without a plan for its use. Most likely, many of your members would be better off if they saved a significant portion of their tax refund. Here’s a fresh idea: roll out a program that would nudge higher savings levels using tax refunds as the starting point.
A few facts every credit union should know:
- 84% of all households making less than $51,000 expect a tax refund
- Refunds for those households averaged $2,300 in 2015
- ⅓ of those households have no real plans for their refunds
- Between 40-70% of households report living paycheck to paycheck, depending on the survey.
- 48% of households don’t have enough liquid savings to handle a $500 emergency.
Our partners at The Common Cents Lab at Duke University, a group that searches for solutions to increase the ﬁnancial well-being for low-to-moderate-income people living in the United States, connected those facts, then tested and created a program that encourages households to save a portion of their tax refunds for their financial well-being.
And it works: In implementations last year, 27% of consumers exposed to the program participated and they elected to save on average 35% of their tax refund.
Want this fresh idea for your members? We can help you implement this program in your credit union. Connect with us today so you can help your members next spring.