5 Ways Gen Z Can Use Their Tax Refunds To Get Rich in 2024
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.
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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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