Take a look at the things you own. Maybe you have a car or a home or a cottage in the woods. You could be very happy with the things that you have and it might even feel like a lot. However, these days many individuals owe at least some debt. It may be from credit card debt or student loans, but either way it’s there. When it comes to calculating your net worth in order to truly know what you can call yours, you have to consider the things that you owe.
Developments in technology and easy-to-use online platforms for budgeting, payday loans, saving, and investing have changed how we can track and plan our personal finances. To better understand finances and net worth, just click here to see how short-term online loans can get you through tricky financial situations. Ready to improve your relationship with money? Here’s what you need to know about increasing your net worth.
What is Net Worth?
You’ve probably heard of how important it is to have a good credit score in order to get approved for the best loans and credit cards. Your net worth is an equally important number to know and track. Your net worth lets you fully understand your current financial position and gives you a reference point for observing progress towards your goals.
You can easily set up your own net worth statement by listing the assets that you own and their value and subtracting your liabilities (what you owe) from that number. Your assets can be anything from personal property, cash, real estate, investments, and automobiles while your liabilities are things like the mortgage, loans, and lines of credit.
Let’s say you have some savings goals in your life. You’re tired of feeling like there’s never enough money to last from one paycheque to the next and you’re maybe relying too heavily on credit, payday lenders, or cash from a friend.
Increase Your Net Worth
Perhaps part of the reason why our net worth sometimes remains undetermined is because it’s better to know now than it is to know, especially when you feel like you never have enough money. This kind of avoidance only leads to financial problems, however, and can get in the way of you actually making strides to improve your life.
To increase your net worth, you need to do two things: increase your income and eliminate debt. Sure, this sounds simple and easier said than done, but the tricky part is really just committing to financial improvement. Credit card interest rates are counter-intuitive to any wealth-building, so you need to put a stop to them. You should be saving over 25% of your income already, so use that money to focus primarily on debt so your savings actually grow.
Your Financial Future
You can focus on investing, which will boost your net worth and financial profile while generating income. Your net worth might just be a number, but it has a big role in your quality of life. Eventually, your money will start working for you and you can really start to see the rewards of all your early stages financial planning.