Looking to get a better handle on your personal finances? Increasing your net worth could be the key to unlocking financial freedom.
But what is it?
Your net worth is a simple equation. It’s the value of all your assets, minus all your liabilities. Punch it into your calculator, and you may not like what you see.
A low net worth isn’t exactly unique — even some of the biggest celebs have way less money than you think. But that doesn’t mean you have to accept you’ll never increase your net worth.
Here are three ways to give a boost to your finances.
1. Pay off Your Debt
It doesn’t matter if you’re an actor banking $1 million an episode or a minimum wage worker who doesn’t make that in a year. Your debt plays a significant role in your overall net worth, regardless of how much you earn.
It’s also money that you could otherwise use to grow your net worth. Think of all the cash you’re sinking into debt repayment. If these debts didn’t exist, you could put this money towards investments and other high-growth opportunities.
Striking out red from your ledger can be a challenge, but it’s doable. Look to your budget to see where you can free up more cash to boost how much money you put into debt.
2. Take Saving Seriously
It’s been several decades since you could grow your wealth by stockpiling cash under the mattress. Arguably, this has never been a great way to save. Money kept outside of the bank won’t earn any interest — to say nothing about how dangerous it is in case someone breaks into your house!
But why does interest matter to your net worth? Earning interest is the only way you can drive up the value of your money.
Every year, inflation raises the price of goods and services incrementally and diminishes the value of your dollar. Although you may not feel the effects of inflation year to year, you will notice the difference in prices and your purchasing power over decades.
A regular savings account usually doesn’t offset the rate of inflation. Most general savings accounts offer one percent interest or less, while inflation is usually always above two percent.
Saving seriously, with high-yield savings accounts and high-growth investments, is the only way to get a leg up on inflation — and give a boost to your net worth at the same time.
3. Talk to a Professional
It’s your money, your bank account, and your net worth. With a claim like this, it’s easy to feel like you’re the one and only person responsible for your finances.
In reality, there are plenty of experts willing and able to help you make the tough decisions — from private counsellors to professionals with credit unions and banks.
A local credit union may offer a more personalized approach to your needs than a multi-conglomerate bank. Typically, credit unions offer a more human approach by catering to the individual needs of each member.
If you’re ready to talk about investments, click here to see how a credit union and wealth professionals can help grow your wealth with specialized support.
Anyone Can Make a Difference
It doesn’t matter what you earn or how much debt you carry — anyone can make a change to their finances.
Improving your net worth is a long game, so don’t expect to make a single change and see immediate results. But commit to healthy financial habits over the years, and you’ll make noticeable headway. Start thinking about your finances and follow the tips above to give a boost to your net worth.