1. Have a Financial Plan

George McFarlane, president of 7 Waters Advisors, joked that many people find budgeting about as appealing as getting a root canal. However, just like a root canal can eliminate a bad tooth and keep an infection from spreading, sitting down to budget can pull out the rot in your spending habits.

“Setting aside a couple of days to review your spending habits this year and plan for next year can significantly enhance your financial well-being,” he said. “Begin by examining your expenditures.” 

He recommended starting with a review of your bank and credit card statements, since it’s all too easy to overlook small purchases that add up quickly. From there, you can categorize your expenses into necessary and unnecessary spending, which are pretty self-explanatory. 

“After categorizing your expenses, set a savings goal for the upcoming year, aiming to increase your savings compared to the previous year,” he said. ”With these considerations in mind, create a budget that prioritizes savings and essential expenses. Once you determine how much these will cost each month, you’ll know how much you can afford to spend on non-essential items.”

2. Maximize Your Tax-Efficient Savings Contributions

As a global success coach with G Corp Advisory, Jacob Galea has insight into the habits of highly successful people. He said that high-net-worth individuals make sure they’ve maximized their contributions to tax-advantaged accounts like retirement plans and health savings accounts to help reduce taxable income while boosting their savings. 

His advice?

“Ensure you’ve contributed as much as possible to any tax-advantaged accounts available to you. This could mean adding a bit more to your retirement savings or taking advantage of any employer-matched contributions,” he said.

Employer matches are essentially free money, so it’s smart to contribute enough to take full advantage.

3. Use Debt for Growth

It’s easy enough to consider a sudden financial windfall, like a holiday bonus or a particularly generous gift, and think about a trip to the Caribbean (or really, any place warm). But McFarlane said that wealthy people see an opportunity to use extra funds to clear unproductive debt as soon as possible.  

“This commitment can help you achieve significant financial goals such as funding your children’s education, becoming debt-free and securing your retirement,” he added. “Instead of spending extra money on non-essential items, consider using it to pay down high-interest debt.”

4. Donate to Charity

Despite stereotypes that wealthy people are stingy with their riches — there’s a reason Ebenezer Scrooge is one of the most iconic figures of the season — they’re often quite generous. Galea said there’s no reason why you can’t be as compassionate as you are savvy. 

“Philanthropy is a common end-of-year activity among the wealthy, not only because of the impact it creates but also due to the tax deductions,” he said. “They often donate appreciated assets like stocks to avoid capital gains taxes while still getting the full deduction.”

Making a charitable donation before the end of the year can be a great way to give back to the causes that fill your heart while also offering potential tax benefits. The IRS allows deductions for charitable donations up to 60% of your adjusted gross income, making it a smart financial move as well as a kind one.

5. Improve Your Financial IQ

According to Andrew Cordle, founder and CEO of the company Money Is, the best investment you can ever make is in yourself. Wealthier people know that investing the time to learn about the latest trends in finance is one of the most effective ways to grow their assets. But it’s never too late to start building the baseline of what Cordle calls your financial IQ.

He said that your financial IQ directly correlates to your financial net worth, making it crucial to increase your financial knowledge. 

“The top priority should be investing in yourself by enhancing your financial IQ, learning how to manage money effectively,” he added. “Constantly striving to boost [your] financial IQ is the best investment [you] can make.”

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