Many times, when we are talking about a “successful” business, we want to know what the business is worth. What we really want to know is its “net worth” – the difference between the business’s assets (cash, equipment, etc.) and liabilities (loans, debt, etc.). Most of the time, when we talk about someone’s “net worth”, we are referring to a celebrity or someone who is notably wealthy. However, EVERYONE has a net worth – some are just larger than others.

Like a business, personal net worth is determined by finding the difference between personal assets and liabilities. Personal assets include things like investment accounts, retirement accounts, house(s), car(s), etc. Personal liabilities include those things like mortgage(s), debt, etc.

Since net worth is clearly important, it’s worth discussing how you can INCREASE your net worth. The following are just a few ideas.

Try to Eliminate Expenses and Liabilities

This one seems pretty obvious, but it’s easier said than done. Obviously, since net worth equals assets xminus liabilities, the lower your liabilities are, the more your net worth will be.

If you have a mortgage, consider paying additional each and every month. Remember, since you would be paying more than your traditional payment, all of that extra cash would go straight to paying off the principle. Think about this. If you could pay just an additional $250 on your mortgage every month, your net worth would increase by $15,000 in just 5 years!

If you have credit card debt, develop a plan to get it paid off. Whether you choose to use a well-known plan (like the snowball or avalanche methods) or develop one of your own, get that debt paid off! As the debt balance decreases, your net worth will slowly increase!

Save More                                                                             Save Money

Again, this seems incredibly obvious, but it’s not as easy to implement as you would think. As we discovered a couple weeks ago, saving is something Americans in general seem to struggle with. Considering that nearly 38 million families live paycheck to paycheck, it’s no wonder that saving is at an alarmingly low level. Do yourself a favor and develop a plan to save a certain amount each paycheck. That amount can be large or small, but at least it’s SOMETHING. Even those seemingly small amounts can grow over time and develop into a nice little nest egg.

Increase Your Investmentsgraph

One way to ensure that your net worth increases is to invest, invest, invest. If your company has a 401K plan, contribute! Make sure that you contribute at least as much as your employer will match! That’s free money, folks – and we LOVE free! However, if you still have some disposable cash, why not max out that 401K for the year? You can get some favorable tax treatment AND increase your net worth all in one fell swoop – what’s not to love?

If your employer doesn’t offer a 401K plan at work, that doesn’t mean you can’t invest! Open up an individual plan of your own. Go ahead and open up your own Traditional or Roth IRA account. If you’re unsure which is best for you, check out our previous blogs on Traditional VS. Roth or give our office a call today!

Talk to a Professional

All of the ideas above are great, but if you are serious about increasing your net worth, you’re going to want to bring in the big guns and talk to a professional. Financial planners and advisors live and breathe this stuff. They work with clients who make boatloads of money as well as those who make modest salaries and every size income in between. They are able to sit down with you and develop an individualized plan that will allow you to achieve your financial goals (probably in less time than you thought possible).

Here at Wealth Builders, we aren’t just tax accountants. We have a full financial planning and investment division. Want to increase your net worth? Come on in and let one of our professionals help you to develop a plan to turn that financial goal into a reality. Best part of all? Your consultation is FREE – you have nothing to lose! Call today to schedule your appointment!

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“4 Steps to Increase Your Net Worth by $100,000 in 5 Years.” Well Kept Wallet, 6 Feb. 2018, wellkeptwallet.com/how-to-grow-your-net-worth-by-100k-in-the-next-five-years/.

Cadrin, Matthew. “6 Tips for Increasing Your Net Worth.” Investopedia, 16 Nov. 2017, www.investopedia.com/financial-edge/1212/6-tips-for-increasing-your-net-worth.aspx.

Moss, Wes. “7 Simple Ways to Increase Your Net Worth.” The Balance, www.thebalance.com/increase-net-worth-1289573.