Five Wise Ways to Use Your 2024 Tax Refund to Invest in Yourself
Did you know that nearly two-thirds of Americans receive a tax refund each year, with an average payout of around $3,000? (IRS)
But here’s the real question—how many people actually use their refund wisely?
For many, tax refunds disappear as quickly as they come, often in the clutches of non-essentials rather than opportunities for financial growth.
Throughout the 20 years I’ve been helping individuals and businesses file their taxes, I’ve experienced firsthand how financial decisions can make or break a person’s future.
Over the years, I’ve seen many clients, family and friends choose to spend their refunds casually instead of investing it in their financial future.
While what a person does with their money is their financial business, as an accountant I have to say it bothers me a bit to see people squander this opportunity.
But what I’ve realized is that it’s more about not knowing than careless spending.
So, I’ve taken the opportunity to shed some light on a topic that’s just not explored enough.
The Problem: Wasted Refunds & Missed Opportunities
Every year when I file my client’s taxes, I see hard-working middle-income professionals get excited about receiving a tax refund—only to find out after that money was spent on impulse buys, temporary pleasures, or unnecessary expenses.
What’s worse is that many overlook the power of tax planning and how this refund could be the foundation for long-term financial security.
Unfortunately for many of us we tend to be a little more reactive than proactive. Thus we handle money matters when they become urgent rather than preparing in advance.
But let’s focus on the solution instead of the problem.
The Solution: Invest in Yourself & Your Future
Instead of spending your tax refund on fleeting expenses, consider using it as a stepping stone to secure your future. Below are five wise ways to make your tax refund work for you:
1. Boost Your Emergency Fund
A financial safety net is always essential.
Experts recommend having at least three to six months’ worth of expenses saved up. Yet, a 2023 Bankrate survey found that only 43% of Americans could cover a $1,000 emergency with savings.
For some middle-income earners, an emergency fund is especially crucial. Unexpected expenses—medical bills, car repairs, or sudden job loss—can throw your finances into disarray.
Use your tax refund to build or top up your emergency fund, so you’re prepared for life’s surprises. Remember the old saying, “Prevention is better than cure.” A well-padded emergency fund prevents unnecessary debt.
2. Contribute to an IRA Account
Retirement planning is not just for the wealthy—it’s for everyone. Middle-income earners often don’t prioritize retirement savings because they’re focused on immediate financial needs. However, your future self will thank you if you start investing now.
Consider putting part of your refund into an Individual Retirement Account (IRA)—either a Traditional IRA (for tax-deferred growth) or a Roth IRA (for tax-free withdrawals in retirement). Even a modest contribution can grow substantially over time thanks to compound interest.
3. Invest in an Index Fund or ETF
If you’re not investing, you’re leaving money on the table. The stock market has historically provided an average return of 7-10% per year. One of the easiest and safest ways to start investing is through index funds or ETFs (Exchange-Traded Funds).
These funds track major stock market indices like the S&P 500 and are low-cost, diversified, and perfect for beginners. Instead of letting your tax refund sit in a low-interest savings account, consider investing in an index fund or ETF and watch your money grow over time.
4. Start a Side Business to Generate Extra Monthly Income
A tax refund can be the seed money for a profitable side hustle. Whether it’s e-commerce, consulting, real estate, or a digital service, an extra source of income can provide financial security and flexibility.
Many middle-income earners have valuable skills outside of those used in their careers that could be monetized.
Are you great at baking? Consider a small catering business.
Do you have expertize in a trade?
Offer freelance services.
Investing in a side business can lead to long-term wealth creation, and some business expenses are even tax-deductible.
5. Improve or Learn a Skill That Increases Your Lifetime Income
One of the best investments you can make is in yourself.
Whether it’s an industry certification, online courses, or a professional workshop, upskilling can significantly increase your earning potential.
Many high-income opportunities require specific qualifications. Whether it’s getting certified in your field, learning digital skills, or mastering a new trade, use your tax refund to position yourself for higher earnings in the future.
Final Thoughts
Your 2024 tax refund isn’t just extra cash—it’s an opportunity.
Instead of spending it on things that bring only temporary satisfaction, consider using it wisely to build financial security and a brighter future.
Start small. Pick one or two of these strategies and put your money to work. Your future self will thank you.
If you need personalized tax planning advice or want to explore how to maximize your refund, let’s talk.
Contact me at leighton@propertiesandnotes.com, (954) 237-3981 - direct cell, or (954) 400-0399 - office line, for a consultation.
Let’s turn your tax refund into financial growth!
So, until the next blog, remember: “there’s always a solution, it’s just to find the right one.”
‘Walk good!