7 unrealistic ways people spent their tax refunds

Now that the dust from busy season has cleared, it’s on to late spring and summer activities. You may soon be going on vacation, arranging an annual retreat with your staff, educating your clients on tax law, and even beginning to think about your extension clients.

How about taking a few minutes to read about some of the most unrealistic ways people have spent their tax refunds? While your advice as a tax pro is probably to pay down credit card debt or put the money toward a wise decision, take a look at some of these outrageous spends. And leave a comment below if you have a good or funny story to share about one of your clients.

1. The old scratch off

While some do win money by playing the lottery, the chances of doing so are extremely slim. You’re much more likely to lose and end up throwing away that ticket.

2. What happens in Vegas …

While we’re on the subject of gambling, it’s not unusual to see people go to Vegas to spend their refund. “… I’ve seen people not only blow all of their tax refund in Vegas, but they also play on credit and lose, which means they return from Vegas with a debt to pay off in addition to blowing their tax refund.” —Ben Barzideh, wealth advisor at Piershale Financial Group.

3. Isn’t an 80″ TV worth it?

New TVs have long been a popular tax refund purchase, but most people who purchase new TVs with tax refunds already have working models and just want something newer or larger.

4. Going on a shopping spree – Whee!

If you don’t usually have thousands of dollars at your disposal, you might feel tempted to shop till you drop. This could mean buying an entirely new wardrobe, several new video games, or any other purchases that weren’t thought through.

5. Buying exercise equipment you won’t use

Tax refunds often come in just after the new year, and pair with New Year’s resolutions, such as getting in shape. As a result, some might be tempted to invest in exercise equipment, diet plans, or gym memberships. Don’t do it unless you’re going to use it.

6. Throwing a big party!

The cost of food, drinks, entertainment, and decor can easily add up when not budgeted carefully. If you want to host a get-together, think about the money you spend. Just because you have more money than you usually do, doesn’t mean you should spend it. You can throw a budget-friendly party and use the rest of the refund for other things.

7. Expensive equipment for a sport you don’t play … and no, it’s not curling

The lesson here is not to use a refund to splurge on a new hobby without knowing whether you’ll actually have time for it. Trudy Turner, a senior wealth manager at United Capital, said a woman she knows made a New Year’s resolution to take up golf. She used her tax refund to buy expensive golf clubs, equipment, and prepaid lessons with a golf professional, instead of making a resolution that doesn’t cost any money to keep.

“She soon learned it was difficult to schedule time to play, much less find golf courses,” said Turner. “After spending the entire refund, she realized that she couldn’t commit the time.”

Sources: FinanceBuzz, Yahoo! Finance