Low-income households across the United States struggle to find ways to manage tight resources, make hard financial trade-offs, and cope under the real stresses of material hardship and costly financial shocks. Despite these challenges, research shows that many households act upon opportunities to save and accumulate assets to help them get by and get ahead.

The Refund to Savings (R2S) initiative seeks to gain a deep understanding of the financial lives, behavior, and decision making of low-income households. It also seeks to translate findings into low-touch interventions to help low-income households increase savings, financial security, and financial mobility. The initiative is a unique partnership among the Center for Social Development at Washington University in St. Louis; Duke University; and Intuit, makers of TurboTax.

This paper presents findings from the R2S TurboTax experiment and two waves of the Household Financial Survey (HFS), a large-scale longitudinal survey. The HFS sample is drawn from a national pool of individuals who used the TurboTax Freedom Edition between January 30, 2013, and April 15, 2013, and who were eligible for a federal tax refund. The baseline of the HFS collected data on 20,761 users immediately after they filed their taxes. Approximately 6 months later, participants who completed the baseline survey were invited to complete the follow-up HFS, and 8,324 respondents did so. Importantly, the survey data were matched to and merged with individual-level tax data provided by TurboTax. The result is a very rich and reliable data set on low-income households.

The data show that low-income households are interested in and able to save at least part of their tax refunds for at least 6 months. Moreover, statistical analyses demonstrate that the most effective R2S interventions are associated with increases in both the likelihood of saving and the amount of the refund saved for 6 months. Not surprisingly, the survey data also reveal that many of the sampled low-income households face pervasive financial hardships (e.g., difficulty covering monthly expenses and financial shocks in the 6 months following tax filing). This paper examines the effects of several types of financial hardships, expenses, and shocks on households’ stocks of assets and debts. Finally, it explores the policy implications of findings on household financial volatility and tax time contingency savings decisions.