Most financial gurus believe that net worth is an excellent way to gauge a person’s financial success. Most business owners are not fully satisfied with their net worth, and try to increase it. However, increasing net worth is not all that easy, it requires guidance and not to mention, willpower.
So, let’s first discuss what exactly net worth is?
Well, it is the sum of all that you own, which could be your house, business, retirement funds, your account balance, savings, investment accounts minus the liabilities such as debt, mortgage, credit, etc.
It is important to be aware of this number so that one can decide as to when can they retire along with the debt they owe and how will it affect their future. Most people are dissatisfied after calculating their net worth and definitely, want to the number to go higher. There are a few ways in which a person can improve their net worth, and they are mentioned as follows:
#1 Reviewing liabilities
It is imperative to review one’s liability. This will provide the idea as to how much debt do they have to pay every month and in which form. Such things like loan payments., mortgage, credit and debit card payments must be analyzed. Reducing debt is one of the best and the most important ways to increase net worth; therefore, paying them back as soon as possible is imperative. Identifying high-interest debts and paying them back faster is the way to go. Making extra payments whenever possible to reduce the overall burden is advisable.
#2 Review assets
Many people do not know how to know the calculate the exact value of their assets, but getting a tentative figure always works. It is important, not to leave out any asset. The primary residence is the most important asset people bank on, so the more equity you have, the higher will be the net worth. Next, comes vacation homes or any other rental property. After that comes, investments such are shares, mutual funds, bonds, stocks, etc. And finally, come the collectibles like art, antique, etc. It is important to realize that market for all the assets mentioned above can fluctuate but finding an appraisal can always help.
#3 Cutting down on expenses
Most people keep an eye on their bigger expenses like buying the latest gadget or traveling, but it is the smaller expenses which get out of hand, more often than not. Making a habit of noting down the smallest of expenses can give one an idea as to how much are they spending on small things and the ways they can cut back on it. It is important to become aware of the spending habits and identify areas which can be adjusted. These small little factors go a very long way. Also, not spending from credit cards is very important, because the credit goes on piling up, using cash or debit card is the smart thing to do.
#4 Getting a raise
One of the best ways to increase one’s net worth for salaried people is to get a raise. If you have been serving a company for many years and you are good at your job, then there is no harm in asking for a raise. Make your request professionally, and if it works out, then you will have more money at your dispense which you can use wisely to increase your net worth
#5 Finding a new source of income
The opportunities for earning money are endless. It is not necessary that a person has only one source of income. Taking up another part time job, or doing freelance work, or selling handiwork, etc. helps in making extra money in your spare time. The money may seem less, but cumulatively may sum up to be a big number, so it’s important not to rule out smaller sources of income.
#6 Investing in stocks
While investing in stocks can lead to market risks, it rather foolish to let your money lie around. Make the money work for you by asking for professional help and investing in stocks which will reap benefits in the future. There is not an easier way to boost your income without putting in extra efforts in the long term.
#7 Save up!
Working on your saving and debts at the same time is something you must work on. It is very important to prioritize savings even if you have to pay debts. Cash reserves act as a buffer in case unexpected expenditures pop up. Early saving helps; it is a very good habit because you will be left with some amount of money even after you have paid all your debts. One must think of ways in which they can enhance their savings at a faster rate. The target should be to save at least 20 percent of one’s income and go on increasing this percentage on a yearly basis.
#8 Start working with what you have
So your net worth could be way below your expectations, but there is a starting point of everything. Calculative moves always pay off, so start with what you have. Practice a daily budget and stick to it. Keep persisting in keeping your expenses within the budget, and soon it will become a habit. This way you will be saving up a lot of money every month which will grow to a higher number in a year’s time. So losing heart from the very beginning is not the way to go. Instead, it is better to work with the limited resources and improve them over time.
#9 Taking professional help
Irrespective of your financial position and your net worth, a professional advice can help you in stirring things up in the right direction. Most people are embarrassed by the state of their finances and thus do not want to take professional help, but that is a wrong notion. Professionals are there to help those who have financial problems and get them going. They have the latest information and ideas as to how can they go about in increasing the net value of the person concerned.
Use these nine strategies to increase your net worth!
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