You have probably heard the phrase “net worth” many times in the personal finance space. You may have even calculated your net worth but are now wondering, “now what”? Tracking your net worth is one of the tools in your financial toolkit to help you plan and build a financial plan.
In this post, I will teach you ten net worth strategies to help you to build your net worth and have a solid financial path to wealth.
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Calculate Your Net Worth
Before you even begin to think about your net worth, you may be thinking about what your actual net worth is. I’ve got you covered! Your net worth is a snapshot of all of your assets relative to your liabilities.
I breakdown what your net worth is and how to calculate it in this blog post.
Or you can grab my net worth tracker below and calculate your net worth within minutes!
Become Financially Literate
The next step in building your net worth starts with education. You need to become financially literate if you have a desire to increase your wealth and grow your finances.
Financial literacy starts with having a basic knowledge and understanding of how to manage your money, improve your budgeting skills and learn the basics of investing. When you learn about money, you will be in a better position to make sound financial decisions and improve your life.
As you become more educated in money matters, you will find that your mind will expand and you will start to see opportunities all around you. You will no longer have a sense of dread when it comes on money, instead you will embrace the possibilities it creates and will know the exact steps to make.
Financial literacy is particularly important because it leads to empowerment and will give you the impetus to move toward reaching your financial goals. It also helps you to become more resilient as you realize that money is a tool and you will be better prepared to face financial emergencies that may arise. All in all, financial literacy precedes increasing your net worth in many ways.
Grow Your Skills or Go Back to School
Another way in which you can build your net worth involves taking care of your most important asset, and that is – YOU. You are your most valuable asset and in order to build wealth, you have to ensure that you have the right mindset, skills, and education to demand a high salary or start a business.
Take the time and do a skills inventory, write down all of your core skills and see if there’s an opportunity for you to improve your skillsets and employability. If you realize that you are lacking in a particular area in your industry, consider going back to school to look at online education programs.
As you grow your skills and experience, this will make you become an important asset to any organization and be in a position to demand a higher income. If you desire entrepreneurship, you will be in a much better place to do the work to build a successful business and position yourself for future growth.
An important point in growing your skills relates to also fostering a growth mindset. This will help you to always strive for more and remain ambitious in achieving your financial goals.
Start to Save Money
This might seem like very simple advice but it is one of the quickest ways for you to start building your net worth. Cash is an asset and saving is one of the first things that can set you on the path to high net worth.
In order to save, you need to look at your budget and determine how much you can afford to save on a regular basis and then start to automate your savings. As you make more money, look at increasing your savings over time and continue to grow your solvency.
Some ways to save money include maxing out your 401 K plan at work, purchasing stock in the stock market and also saving for retirement.
As you grow your cash reserves, you will be in a better position to use that cash to gain more assets and further increase your net worth.
“Focus on building assets, that’s the best way to grow your net worth”
— Jodi, Abundanceofjo.com
Pay Off Debt
Debt can significantly impact your net worth and can lead you to a negative net worth over time. As you increase your net worth, your number one focus should be on gaining assets to grow your wealth overtime.
The first lesson you will need to learn when it comes on to debt is being able to manage it. Debt can be a tool to achieve some financial goals like buying a home or funding a business venture.
However, in your personal finances, you must be able to manage your debt efficiently so that you are not using debt recklessly like racking up large amounts of unnecessary credit card debt.
This leads to my next point, if you want to build your net worth, you have to have a plan to pay off debt.
Begin with understanding how much debt you are in, the type of debt (student loan, credit card, payday loan), etc. and come up with a strategy or plan to attack that debt. As you pay off debt, your net worth will increase and you can focus on building assets that will be sustainable and critical to your financial success.
Grow Your Assets
An asset is anything that you own that can produce an economic value and one of the key markers of a strong net worth is having more assets than liabilities.
However, not all assets are equal, some are solvent (cash, stocks etc.) and others are fixed (land, house etc). Your focus should be on building both types of assets and ensuring that they can be turned to cash quickly should you need cash.
There are several assets that people can focus on in their personal finances. These include investing in real estate by purchasing a home or by investing in rental property. The equity in this real estate will help you to increase your net worth while improving your financial standing. In fact, real estate has been one of the major factors that have helped to pass down generational wealth in families.
Another asset class worth considering is a business (more on this later). If you build a successful business that has significant value, this can help to build your net worth as well.
Additionally, you can build your net worth by buying other assets like art or antiques. If you are an art aficionado and enjoy that type of adventure then you may be in a good position to build an asset class that is quite exquisite but valuable.
Invest in the Stock Market
Investing in the stock market is another way to build your assets as you buy ownership in a company or group of companies that are trading in the stock market. This can help to increase your wealth and allow you to capitalize on the power of compound interest.
There are many ways to invest and they include day trading or investing in index fund, ETFs, bonds or mutual funds. With investing, you will have to ensure that you have an appetite for risk and are willing to expose your money to the stock market that can at times be volatile.
You can start investing by opening an account with a stock brokerage firm or you may have already been investing through your 401K Plan at work or if you participate in your company’s stock purchase plan (if they have one).
All in all, investing can help you to build your net worth and give you a solid financial plan once you know and understand the risks involved and understand what you are investing in.
Increase Your Income
If you want to build your net worth consistently, you have to look at your income source. Are you making enough money that will help you to save, invest and improve your finances? If not, you will have to explore ways in which you can increase your net worth.
One way is to ask for a raise. If you are a top performer at work, have contributed to the company’s success, and have an excellent track record, then you need to set up a meeting and have a conversation with your manager and ask for more money.
In order to make this work you need to know your why or motivations, have a record of all your wins at work and go into the conversation prepared and ask for what you want. You may be pleasantly surprised and actually get the raise that you have worked for and increase your income.
A great book on this topic is Say Less, Get More by Negotiation Expert, Fotini Iconomopoulos. She walks you through the exact steps you need to take to get what you want in a negotiation setting. You can read more about her negotiation advice here.
Start a Side Hustle
A side hustle can help you to make extra money on the side which can be used to fund assets to build wealth.
With technology, there is a plethora of opportunities available at your fingertips to make extra cash. From blogging to eCommerce, to coaching, you can definitely find a way to make more money through a side hustle.
The key is to identify your interests, and what you are good at. Then utilize the right medium to spread the word of your business venture to as many people as possible.
Take Care of Your Health
This goes back to the point above where I mentioned that your most important asset is you. On this wealth-building journey, you may be tempted to become overworked, stressed, and place yourself in a situation that can have a significant bearing on your health. But what good is it if you are wealthy but sick and unable to live an abundant life?
Therefore, as you build your net worth, you need to focus on taking care of your physical, mental, and spiritual being. Eat whole foods that nourish your mind and will help you to think clearly and make sound decisions.
Enjoy life – go for a walk, spend time with family, exercise. Do the things that make you feel joyful and happy and nurture your soul.
Go for check-ups and see your doctor to ensure that you are in a solid physical shape as being sick can also affect your financial life.
Get Insurance
Insurance is critical when you are building your net worth and wealth as it helps you to secure your financial assets.
Whether you are the breadwinner in your family or if you are single, insurance is the key to protect and safeguard your family in the event that something happens to you.
Types of insurance include health insurance, home insurance and life insurance. Consider these insurance types and shop around to find the best rates with the right coverage that you need for your family and for yourself.
Why Increasing Your Net Worth is Important
Building your net worth is important because it helps you to gain a full understanding of your financial position and will put you on the path to financial success.
It also helps you to put your finances in perspective – looking at your relationship to asset management and debt.
As you go through these ten ways to increase your net worth, I hope you will be inspired and educated and start to apply these practical steps today.
Related Blog Posts on Building Your Net Worth
- How to Calculate Your Net Worth
- Learn how to organize your finances
- How to Pay Down Debt + Free Printable
- How I Paid off $3000 in Credit Card Debt in 3 months
- How to Save Money when you live paycheck to paycheck
- https://abundanceofjo.com/negotiation-tactics-with-fotini-iconomopolous/
Tell me in the comments, how are you going to build your net worth and which one of the steps will you start with today?
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