By Allison Linn, TODAY
If you?re like a lot of Americans, chances are you?re hoping you?ll get a tax refund this year.
What?s more, you may?be planning to take that money and do something frugal with it, like put it in a savings account or pay down debt.
Here?s the good news: Most people who say they plan to use most of their tax refund to bulk up savings or pay down debt?keep the vow.
But here?s the catch: They also tend to spend at least some of that money on something like a nice dinner out or a new pair of boots, whether they realize it or not.
?There?s still a significant spending (boost) among this group,? said Jonathan Parker, a professor of consumer finance at Northwestern University?s Kellogg?School of Management who has done research on how people spend government payouts such as tax refunds and stimulus checks.
It appears a lot of taxpayers?plan to use their refunds to improve their personal finances.
A TD Ameritrade survey released last month found that 47 percent of those expecting to get a refund plan to? bulk up their savings account with it, while 44 percent plan to use the money to pay?debt.
About 28 plan to spend at least some on necessities and 15 percent plan to splurge on something discretionary. Respondents were allowed to pick more than one answer.
Using bank data and other sources, Parker has found that when people get money back from Uncle Sam, on average they tend to immediately spend a little bit more than usual.
?You often find a spike in spending right when it arrives ? like, within a week of arrival ? that?s sort of small,? he said.
The sudden jump in their bank balance may prompt some people to?pay that bill that?s been nagging them, or it may make them feel like it?s OK to splurge on something small, like a date night.
After that, he said there?s sort of a delayed response. But over time, people who got money back do tend to spend slightly more?overall, he said.
The people who say they are going to save most of their tax refund or rebate - or mostly use it to pay down debt - do use some of the money toward those goals, he said. But they also tend to spend more of it than they might think they did.
As for the people who said they planned to spend their tax refund? Parker said they mostly do what they planned.
?They were kind of right. They spent the whole thing,? he said.
When people get a bigger tax refund, there is often a bump in spending in August, he noted, suggesting that people are using the money toward a nicer summer vacation.?Others who get a big chunk of money back from Uncle Sam, such as a check for over $1,000, may end up using it as a down payment on an even bigger purchase, like a car.
Even though people who think they are saving most of their refund or using it to pay down debt tend to spend some of it, Parker thinks the system of getting a refund can help some people budget.
?It?s a little bit like a helpful commitment to save,? he said.
Still, some taxpayers do complain about a tax system that can act like a forced savings plan ? or surprise people with an unexpected bill.
Mark Zandi, chief economist with Moody?s Analytics, said that?an ideal tax system would help people?better predict their taxes through the year, so they didn?t end up at with a big payment or refund come April 15.
But given all the other complications of the nation?s tax code, he said it?s far from his top concern.
?I?m not sure I?d worry about that at this point,? he said.
If you get a tax refund this year, how do you plan to use it?
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Todd Austin is a Professor of Electrical Engineering and Computer Science at the University of Michigan in Ann Arbor. His research interests include computer architecture, robust system design, hardware and software verification, and performance analysis tools and techniques. Prior to joining academia, Todd was a Senior Computer Architect in Intel's Microcomputer Research Labs, a product-oriented research laboratory in Hillsboro, Oregon. Todd is the first to take credit (but the last to accept blame) for creating the SimpleScalar Tool Set, a popular collection of computer architecture performance analysis tools. Todd is co-author (with Andrew Tanenbaum) of the undergraduate computer architecture textbook, "Structured Computer Architecture, 6th Ed." In addition to his work in academia, Todd is founder and President of SimpleScalar LLC and co-founder of InTempo Design LLC. In 2002, Todd was a Sloan Research Fellow, and in 2007 he received the ACM Maurice Wilkes Award for "innovative contributions in Computer Architecture including the SimpleScalar Toolkit and the DIVA and Razor architectures." Todd received his PhD in Computer Science from the University of Wisconsin in 1996.
?This is the original concept shot for Fruit Ninja which was pitched to the company during Halfbrick Fridays. This is literally the very first piece of Fruit Ninja imagery ever created, so it?s historically significant,” Halfbrick Studio‘s Chief Marketing Officer Phil Larsen said in an email to me last week after I interviewed him and his colleague Richard McKinney, the company’s Chief Technology Officer, about how the company develops its games. Halfbrick Fridays is one of the ways the Brisbane, Australia-based company comes up with new ideas for its games. Fruit Ninja – its greatest hit to date – came out of this. Halfbrick Fridays About five to seven times a year, the company organizes these Halfbrick Fridays, they told me, where the whole company (about 70 people at this point), breaks into groups of around five people to brainstorm new ideas. The cool thing here is that it’s not just the game designers and developers who participate, but anybody who works for the company – be that in accounting or quality assurance – participates in these sessions. Age of Zombies, for example, is the result of this process (though Larsen and McKinney told me the final version looked very different from the prototype). So is Monster Dash. These events either last for about a week or are spread out to one day during a period of about five to seven weeks. Once the idea for Fruit Ninja was born, it only took a few months to make, but some game ideas, the team told me, have been floating around for years and have yet to become reality. From Idea To Game What’s interesting about how Halfbrick turns its game ideas into actual products is that virtually all of its games use one underlying engine (written almost exclusively in C++). The core engine team consists of six “hardcore programmers,” as McKinney told me, and they ensure that those teams that work on the individual games have a stable architecture that they can then write their own code for. One of Halfbrick’s larger teams, by the way, is now the cloud service team that provides the back-end technology to connect games together across platforms. Halfbrick uses Amazon’s EC2 platform for this and recently switched to a NoSQL database for better scalability. The point of the core engine, the team stressed, is to be able to publish apps across platforms as easily