Increasing your net worth will take time, some financial discipline and sound investment planning, but the reward is financial security. Every dollar you devote to building your net worth moves you closer to freedom from worry during a short-term difficulty or over the course of a long-term obligation. This article identifies 4 such ways.
The short answer is—spend less than you make. Then invest those resources in appreciating assets.
- Take Advantage of Any Employer Match & Max Out Your Retirement: You can increase your net worth with money that is tax-deferred—don’t pass up that opportunity.The most effective, readily available investment option for most people is tax-advantaged retirement accounts…
- Pay Down High Interest Debt: …Practice some extra frugality and put the money you save toward eliminating credit card debt. It will save you hundreds or thousands in interest payments. Then vow to use your credit cards for convenience only, paying them off each month. You can also save thousands in interest payments if you send a little extra on your mortgage each month.
- Build an Emergency Fund: Most people should have an emergency fund covering three to six months expenses. A high-yield account is generally a good place to park emergency funds. In addition to paying higher interest on your money, many high-yield accounts give you fast access to your money, are FDIC insured, typically have low or zero monthly fees and are easy to open…
- Invest in the financial markets: …Put your extra money (a bonus or a raise) to work by investing in stocks or other assets…[and] be sure to scrutinize fees for both advice and investment products. You can accumulate a tidy sum over the long-term if you shave a few basis points off the cost of investing.
Increasing your net worth will take time, some financial discipline and sound investment planning, but the reward is financial security…Every dollar you devote to building your net worth moves you closer to freedom from worry during a short-term difficulty or over the course of a long-term obligation.