Once you have calculated your personal net worth, you can now begin to look at ways to increase it.
To recap, net worth is your assets (what you own) minus your liabilities (what you owe).
Think of it as a financial compass.
One of the keys to becoming financially successful is to increase your net worth over time at an accelerating pace.
Here are 5 ways you can increase your personal net worth:
1. Pay off debts — Start with the highest interest debts first.
The average department store card is at about 28.8% interest so that would be a good one to start with.
Paying off debts works twofold: It gets the liability off of the books and it makes cash available to invest.
2. Earn extra income and invest what you make — Start a business or work a part-time job.
Open up a separate account and invest everything you make.
You would be surprised how motivated you become once you see the number in that account growing.
3. Trim your expenses — Every dollar saved is a dollar that can be invested.
4. Start your own portfolio — Read books and learn how to invest.
Start your own portfolio and see if you can beat your work retirement plan.
5. Reinvest income from investments — This is also known as the snowball effect.
Once you start reinvesting your investments, your net worth will accelerate at an alarming pace.
If you follow these simple 5 tips, you will be on your way to increase your net worth.
Pick just one at first, once you have completed it, move on to the next.
In no time you will have your net worth growing at a pace you could have only dreamed about.