5 Ways Gen Z Can Use Their Tax Refunds To Get Rich in 2024
Written by
Adam Palasciano
Edited by
Daria Uhlig
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Getting a tax refund can feel like you won money. However, the money was yours all along — you just loaned it to Uncle Sam tax-free all year.
The IRS reported that as of the week ending April 5, $201.12 billion had been refunded to taxpayers and the average refund amount was $3,011.
With the number of Gen Z workers expected to surpass baby boomers in the workforce by the end of 2024, according to Forbes, it’s possible that a growing number already are receiving refunds.
5 Smart Ways To Take Advantage of Your Tax Refund
Here are five ways to use your tax refund to pave you way toward wealth in 2024, per Securian Financial.
- Eliminate credit card debt: First and foremost, it’s crucial to eliminate all credit card debt in order to grow your wealth. Credit card debt typically carries high interest and eats a hole in your wallet. Be sure to only spend within your means to avoid carrying debt long term.
- Create or add money to your emergency fund: Starting or increasing contributions to your emergency fund is a great way to grow your wealth in 2024. It’s best to have at least 3 to 6 months of cash saved to cover all of your essential monthly expenses. Using a high-yield savings account as your emergency fund can offer higher interest than a traditional savings account and serve as a risk-free vehicle to grow your savings.
- Increase retirement account contributions: If you got a raise or promotion in 2024, consider adding an additional 1% or 2% of your income toward your retirement account. The earlier you contribute money, the more exponential growth you’ll see from compound interest.
- Start your own business or side hustle: Consider starting your own side hustle or business to bring in extra cash. Growing your venture on the side while you are still working full-time can create a financial safety net and second revenue stream, which can protect your finances in the event of a layoff.
- Add money to a health savings account: If you have an HSA-eligible high-deductible health plan, consider adding your tax refund to it. HSA contributions are pre-tax, meaning that you won’t owe any income tax on HSA contributions. You can use these funds to pay for qualified medical expenses, including dental care.
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