9 Smart Ways to Use Your 2024 IRS Refund

9 Smart Ways to Use Your 2024 IRS Refund

Tax season can be stressful, but the silver lining is often the refund you receive after filing. While it may be tempting to spend it all on a splurge, there are smart ways to make the most of your IRS refund that can improve your financial future. Here are some practical and forward-thinking ideas on how to use your refund wisely.

Build or Boost Your Emergency Savings Fund

An emergency savings fund is crucial for financial security. Many experts recommend every household have an emergency savings account with a balance equivalent to at least three to six months of living expenses. That way you can cover any unexpected expenses such as medical bills, car repairs or a job loss. If your savings account has room to grow, deposit all or at least a portion of your refund into it. Your future self will thank you.

Pay Down High-Interest Debt

Put yourself one step closer to financial freedom by using your IRS refund to pay down high-interest debt, such as credit cards or personal loans. Reducing or eliminating this debt can save you money in interest payments and improve your credit score. Can’t decide which balance to pay down first? You could aim for the account with the smallest balance first or the account with the highest interest rate. There is no right or wrong answer, so choose the option that will have the biggest impact on your budget. Just be sure to keep your spending in check so you don’t incur any more unnecessary debt in the future.

Save for Retirement

If your emergency savings is up to par and your debt is paid off, consider investing your IRS refund in a retirement savings account, such as a traditional IRA or a Roth IRA. Again, your future self will thank you. To get started or learn which investment option may be best for you, contact an a wealth professional.

Start a College Savings Fund
If you have children or grandchildren, you can invest in their future education by starting a college savings fund for their benefit. You can save via a separate savings account or even start a 529 savings plan which could have some tax benefits. Contact a wealth professional to determine which option is best for you.

Invest In Your Home

Your home is one of your largest assets. Using your refund to upgrade or maintain your home can enhance its value while improving your quality of life. Whether it’s for small renovations like new kitchen appliances are a larger project like installing energy-efficient windows, these improvements can save you money on utility bills and increase the resale value of your home.

Start or Grow a Side Hustle

If you’re thinking about starting a side hustle, your refund could give you the financial boost to make it happen. Whether it's purchasing supplies or investing in marketing, your refund can help turn your entrepreneurial ideas into reality, potentially leading to long-term rewards. If you already have a business, reinvesting that money into expansion, new products, or increased marketing can help it grow.

Take a Vacation

Life is all about quality time spent with our friends and family. While spending a portion of your refund on a vacation won’t positively impact your finances, it could improve your quality of life. It’s all about balance.  Just be sure to set a vacation budget and stick with it. Following these simple tips will help you save for a vacation without breaking the bank.  The last thing you want to do return from a relaxing trip to the beach drowning in debt.

Give Back

Put your IRS refund to good use by donating all or part of it to your favorite nonprofit organization. Not only will you be helping others in your community, but you will also gain a sense of pride that will last much longer than if you spent your refund on material items.

Support Local Businesses

One of the most impactful ways you can help is by shopping local. For example, you can support local restaurants throughout the year by putting your IRS refund in a savings account and using it to order in or eat out. You're helping a local business thrive without impacting your budget.