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1. Pay off high-interest debt

Financial experts say you should only use your credit cards as a stop-gap between paychecks, and that you should pay off the full balance each month. But the truth is, according to the Federal Reserve Bank of New York, more Americans than ever are carrying a balance on their cards from month to month. Credit card debt reached an astonishing $1.08 trillion in the third quarter of 2023, which is up by $154 billion over the previous year.

In the past, the traditional recommendation was to have an emergency fund before getting your credit card balance closer to zero, but that perspective has evolved. Key financial experts now say you should pay off high-interest credit cards first — that way, you won’t be using your emergency fund to pay off your debt.

As of November 2023, the average interest rate on most credit cards was 22.75%, which can make it feel like you’re trying to dig yourself out of a Grand Canyon of debt with a garden shovel. To avoid forking over serious interest down the road, it’s a good idea to pay off as much of your credit card debt as you can with your tax refund.

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2. Start an emergency fund

If you have your credit card under control but are still feeling the crunch of monthly bills, it might be worthwhile to pitch your tax refund into an emergency fund.

Conventional financial advice would have you save between three to six months of your regular expenses (items . This is to cover items like rent, food, transportation costs, gas, debt and utilities) in case of an emergency.

But, since the pandemic, a lot of industry insiders have begun tailoring that advice, reassuring those whose finances took a hit that something saved is better than nothing, and that you can prorate what you save according to the income you make.

If you put your prospective fund into a high-interest savings account, the amount will build up quickly.

A Colorado-based economist, Emily Gallagher, studied U.S. financial data from 2010-2012, and came up with a figure of $2,467 for lower-income families. This represents about one month’s worth of expenses. If six months’ of expenses seems so unattainable that it makes you want to laugh until you cry, find a number that’s a little less daunting.

3. Retirement savings

Depending on how close you are to retiring (or even if you just like looking towards the future) it’s also a wise move to put your tax refund into options like an IRA or a 401(k).

Traditional IRAs are usually the right call if you expect to be in a lower tax bracket when you retire, and Roth IRAs are better if you are in a lower tax bracket right now.

If possible, try to put in the maximum amount you can, so that if your employer offers a matching 401(k) program, you can take advantage of it. You can possibly write off this contribution with next year’s taxes.

If you are in a lower income bracket, you may qualify for a Saver’s Credit of $1,000 (or $2,000 if you’re filing jointly with your spouse) when you contribute to a qualified plan.

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4. Invest in the stock market

Depending on the size of your refund, consider investing in stocks, bonds, or mutual funds. A 2023 Gallup survey reported that 61% of Americans owned stock, the highest percentage since 2008. If you haven’t yet invested, it might be a good way to increase your financial holdings.

William O’Neil, the founder of Investor’s Business Daily, believed that you only need between $500 and $1,000 to buy shares of a particular stock, but you may need even less than that.

An easy and cost-effective way to start would be with the help of a robo-advisor. With this option, an algorithm will pick your investments based on your risk tolerance, the age at which you’d like to retire, and your basic expenses. They often require less money upfront than traditional investment services.

Another option is to sit down with a certified investment advisor. While many ask for a retainer, some investment advisors also will offer their expertise at an hourly rate, which can cost a few hundred dollars and might be the best option if you want financial advice on more than just investments.

5. Home improvements

Everyone talks about their dream home, but there are distinct advantages in using your tax refund to make your home even homier.

Until 2032, the Inflation Reduction Act will enable you to use tax credits to cover 30% of qualifying improvements to your primary residence (which is just a fancy way of saying the home you live in). Depending on which home improvements interest you, look for products with “Energy Star” branding on them, which means they’ve passed the strict energy-efficiency regulations set by the U.S. Environmental Protection Agency or the U.S. Department of Energy.

A new washer/dryer, central air, new air ducts, a state-of-the-art stove or fridge: These would all be covered by the Energy Star program.

Plus, looking for new appliances or fixtures tends to mean you’re looking at more energy-efficient ones. As Consumer Reports points out, the National Appliance Energy Conservation Act of 1987 compelled a lot of manufacturers to start putting out better functioning models — but your upgrades can be to a lot more than just your appliances. To check out a full list of this year’s potential upgrades that could get you a tax break next year, check out the Energy Star website.

6. Putting up a “Little Library”

Who doesn’t like books?

You’ve probably seen those little “birdhouse” libraries on some people’s front lawns. A “Little Free Library” is a sharing library that operates on a “take a book, leave a book” basis. Founded in 2009 by Todd Bol, the headquarters of the 501(c) non-profit is based in St Paul, Minnesota.

In order to have an official Little Free Library, you need to buy a plaque from the organization. Depending on which state you live in, it’s likely that you can write off the purchase of the plaque, books to start you off, and any monetary donations you might want to make to the foundation itself.

Little Free Libraries boost literacy skills by typically “housing” books for all ages and interests, and making them available 24 hours a day.

If you’re interested in fostering both literacy and community, you can sign up to get one here.

7. Maxing the relaxing

In December 2023, Forbes conducted a poll about New Year’s Resolutions, and almost half of the respondents wanted to prioritize their fitness. Most of those recognized that physical and mental health were of equal importance.

There is plenty of evidence that better mental health nurtures better physical health, and that practicing mindfulness can help with both depression and chronic pain issues. If you’ve been thinking that 2024 is your year to work on your overall well-being, then it might be the time to prioritize the “mental health” initiatives that will make you healthier.

Whether it be an introductory yoga class, an annual subscription to a meditation app, or getting regular massages, lowering your stress today is probably a good call for your tomorrow. Most of this would not be claimable on next year’s taxes (except for chiropractic or osteopathic care), but it is a solid, present-day investment in you.

8. Create a will or estate plan

As Benjamin Franklin once said, “in this world, nothing is certain but death and taxes.” Many people don’t like to consider end-of-life planning, but having your estate legally organized can alleviate a great deal of stress for the loved ones you leave behind.

If you haven't done so already, consider using part of your tax refund to consult with a legal professional to create or update your will and estate plan, or to buy or rent will-planning software.

Depending on experience, location and how complicated your estate is, an estate-planning lawyer will charge a consulting fee of $200 to $500 USD an hour.

As long as a will is legally recognized, it does not have an expiry date, and may only need periodic updating if your circumstances change.

9. Buy quality items

Finally, there is always the idea of using your tax refund to invest in high-quality items that will last longer and potentially save you money in the long run, such as hardy furniture, new equipment for work — an ergonomic chair, perhaps? — or replacing the threadbare items in your wardrobe.

The usefulness behind the idea of spending more money upfront can be encapsulated by author Terry Pratchett’s notion of the “Boots Theory”: A good-quality item will initially cost more, but the lesser-quality, cheaper item will need more frequent replacing and will cost more over the long-term.

Additionally, certain items in your home (like throw pillows, bedsheets, or bath towels) should be replaced fairly regularly, otherwise they can become hotbeds for bacteria, which isn’t great for your health, or living space. Now might be the perfect time to browse for some replacements.


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Bronwyn Petry Email Specialist

Bronwyn is currently part of the email content team for Moneywise. Before starting here, they freelanced for several years, focusing on B2B content and technical copy. Pre-pandemic, you could find them planning their next trip, but lately, if they're not at work, you can find them hanging out with their cat and dog.


The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.