One of the most important starting points for building wealth is to focus on your net worth. So, if you are eager to learn how to increase your net worth, and start building your wealth in the process, then this resource is for you.
However, before we dive into the best ways to build net worth, let’s first get clear on exactly what net worth is. In it’s most simplest form, your net worth is the value of all of your assets, minus all of your your liabilities. In other words, your net worth is essentially what you have left after you’ve subtracted the value of all your debts from the value of everything that you own.
“It’s Not How Much Money You Make. It’s How Much Money You Keep.”
– roberty kiyosaki –
Now, if you are serious about becoming wealthier, then you’ll have to get serious about your net worth. Having said that, getting wealthy isn’t the end all be all in life, but it is not a bad end result to pursue.
In fact, we are big believers that money equals freedom. Why? Because the more money you have, the more you can do, and the more you can do, the more free you are.
It’s all about options, and more money equals more options, and more options equals more freedom. So, let’s focus on building your net worth, both for the thrill of growing your wealth, and also for the benefit of achieving more freedom and flexibility in your life. With that said, if you’re ready to learn the best ways to increase your net worth and start building your fortune today, let’s get started:
7 BEST WAYS TO BUILD NET WORTH
Marcus Buckingham once stated, “What you focus on expands; results follow focus”, and it’s a powerful reason why everyone should focus on their net worth if they want build wealth. If you want your net worth to grow, if you want to become wealthier, you have to focus on the fundamentals. You have to focus on the incremental growth, and the activities the lead to that continued growth.
Being intentional about your money is key, because winning and getting richer is rarely an accident.
With that said, if you truly want to know how to build your wealth the steps below will guide you. These are the 7 most important things you should begin focusing on to increase your net worth starting today:
1. Save 10 – 20% of Your Paycheck Every Month
First things first, you’ll want to create the good money habit of saving at least 10 to 20% of your paycheck every time you get one. Allocating a portion of your income is the most important thing that you can do to begin building your net worth.
The key is that you do this consistently. Not every other month, not every other pay check, but every time you get paid. Once you’re habitually moving 10 to 20% of your money out of your account before expenses are paid, you’ll be actively building your wealth.
“On Average, Millionaires Invest 20% Of Their Household Income Each Year. Their Wealth Isn’t Measured By The Amount They Make Each Year, But By How They’ve Saved And Invested Over Time.”
– ramit sethi –
So, start stacking 10 – 20% of your paycheck every chance you get, and revel in the thought that you are virtually guaranteed to be richer tomorrow than you are today.
2. Build a 3 – 6 Month Emergency Fund
This next step will almost automatically happen if you successfully follow the step above. This step is important, because you’ll only want to save up a certain amount of money.
Technically you can put all your money into a checking or savings account; however, you’ll dramatically limit how fast your money grows if all you do is save your money. Why? Because interest rates (i.e. growth rates) are practically 0% in most checking and savings accounts.
So, your best bet is to only put enough money away to stave off an emergency, like a job loss, or unexpected roof leak, car accident, etc… 3 to 6 months is what is recommended by most financial experts.
3. Pay Off Your Debts, Begin With High-Interest Debt
Once you’ve created your emergency fund, you can move on to that thing which keeps most stuck financially, and that is debt. There’s various ways you can pursue paying off your debt.
You can begin moving that dedicated 10 to 20% you are saving every month towards your debts until they are paid off completely, or you can choose to put half of that amount towards paying off your debt, while investing the other half (or choose any ratio that feels right to you).
Many people choose to pay off all of their debts before invest. While others choose to aggressively pay off their debts, while simultaneously investing some of their money in stocks, ETFs, or investments that have a higher rate of return than the interest of their debts.
The approach you choose comes down to what you’re comfortable with. The important thing is that you just begin process of more aggressively diminishing your debts.
4. Invest As Much As You Can As Soon As You Can
This step is the step where you’ll really begin becoming rich and successful. Without a doubt is also one of the more enjoyable steps towards building wealth. Why? Because once you start investing your money into different investment vehicles like stocks, real estate, ETFs, etc.., you’ll really begin noticing the uptick in your net worth.
Related: Best Growth ETFs
Once your money is going towards investments, the growth usually accelerates due to compound interest and the higher growth rates that are typical of investments. (Disclaimer: Of course there is always risk of loss, and we are not investment professionals, so seeking expert investment advice is always recommended before you start investing your money.)
So, once you’ve obtained your emergency fund, and have your debts under control, begin investing as much as you can as soon as you can, and your net worth will begin to grow dramatically.
“Get What You Can, And What You Get Hold, Tis The Stone That Will Turn All Your Lead Into Gold.”
– Benjamin Franklin –
5. Begin an Expense Management Plan
Once your net worth begins increasing, your enthusiasm for growing it even more will likely grow as well. When this happens, you’ll begin looking for ways to invest even more money.
At this point you’ll want increase the amount of money that you’ve committed to pulling from your income or paycheck. At this point, the only thing limiting how much of your income you can divert to your investments, will be your expenses.
Therefore, you’ll want to begin an expense management plan. An expense management plan is nothing more than you zeroing in on your expenses for the sole purpose of reducing what you are spending your money on.
Discover what expenses you can do without. Find out which expenses are frivolous, which ones can be minimized (i.e. looking for a cheaper internet service provider, cutting down on eating out etc..) In short, begin looking for ways to cut costs so you can increase how much money you have left over to invest.
6. Review Your Net Worth and Financial Goals Often
You don’t have to become obsessed with increasing your net worth to grow it; however, you’ll want to ensure you create a healthy concern for your financial well-being.
You’ll want to focus one your progress, and contemplate what’s been working, what isn’t working, and then adjust your wealth building activities according to your progress and how well they are aligning with your long-term financial goals.
A good place to start for tracking the growth of your net worth, should be at least once a month. If you can review the growth and change in your net worth, and plan accordingly at least once a month, you’ll start to see your wealth slowly grow.
If you’re not sure how to track your net worth, this article on how to retire early provides an easy way start tracking your net worth.
7. Upskill; Earn More to Invest More
This last suggestion for building your net worth is one of the most overlooked methods, but it it is by no means the least-effective. In fact, this step, if done correctly, can supercharge your ability to increase your net worth more than any other step.
Once you’ve built the previous wealth-building strategies into your net worth growth plan, you’ll want to focus on upskilling. In other words, you’ll want to find ways to become more valuable to your employer or the marketplace.
Becoming more valuable can be done in a variety of ways, but typically, learning new skills, or taking on new roles within your company can help you increase your pay.
You can learn new skills on platforms like Coursera, Linkedin, Udemy, and Udacity. So, if you’re serious up leveling up your skillsets, be sure to take a look at one of these top upskilling platforms.
Similarly, if you’re in business for yourself, you can find new ways to serve your customers and add more value through training or offering new products and services. So, build net worth by building yourself into something more valuable.
Ultimately, the end result will be an increase in income or profit for yourself. This increase in income and profit will translate into an increase in how much money you can invest. So, don’t overlook this step, as it can put your wealth-building efforts into hyperdrive.
“Your Success Will Always Be Measured By The Quality And Quantity Of Service You Render.”
– Earl Nightingale –
Related: How to Get Rich With a Normal Job
Final Thoughts
You now know how to increase your net worth, and as a result, you also have a solid plan to begin building your wealth today. The key is to remember what you learned, and then to apply it to your life daily.
With that said, here’s a brief summary of that plan that you can download, save, or print to help you have easy access to the steps that’ll help you build wealth. The list includes what we believe are the best steps for how to build net worth. We hope it helps you eventually achieve the net worth you choose to strive for:
If you enjoyed this resource, or if you know someone who might appreciate these simple ways to increase their net worth, please share it with them.
Lastly, if you enjoyed this resource on how to increase your net worth, then you’ll likely enjoy these powerful resources that will help you improve your perspective on wealth building:
- Affirmations For Wealth
- Money Affirmations That Work Fast
- How To Become a Virtual Millionaire
Until you reach your aims,
STRIVE
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