Growing your net worth is a choice, you have to choose what you want, plan how you want it and take consistent actions towards achieving it.
If you want to reach a higher money target, create a better plan than you did before. Good planning is key to unlocking your money growth. Extraordinary people do “extra” things than the ordinary people.
Here are the “extra” tips to consider in the path of growing your net worth:
#1 Evaluate your net worth
The first and most important place to START in any money growth process is to know where you are before you can move to where you want to be. And you can achieve that with a knowledge of what your net worth is.
In order for you to grow your money, growing your net worth should be your primary goal. And in order to grow your net worth, you have to understand what “NET WORTH” is and how to calculate yours.
Your Net worth = (Asset owned) – (liability)
Calculate your net worth here using
- Investopedia net worth calculator
Your asset is anything of value owned by you which can be converted into cash. Examples are tangible assets; cash, buildings, personal property and other intangible assets; patents, bonds, stocks, computer programs and so on.
Your Liability is anything you owe. Example your debts, loans, bills.
If your assets are greater than your debts, you have a POSITIVE net worth and also if your debts are greater than your assets you have a NEGATIVE net worth (the reason why debts should be dropped)
Knowing your net worth gives you
- an idea of what you actually have and not what you think you have
- a wake-up call if you are not on track
- the financial evaluation needed to track your targets and the motivation to achieve your money goals
A knowledge of your net worth also helps you pick out areas where excess expenses are made and helps in reducing debts when you can see it’s negative effect on your net worth
It’s important you keep track of your net worth always to know how far you have gone.
#2 Set a 5-year money target (your financial plan)
Time flies, I bet you can easily recall where you were last five years or what you hoped you would be by now.
The beautiful thing is that you can decide now what the product of your next five years would be, you can dream big about it and work towards your targets.
But the big question here is “What do you want your net worth to be in the next five years?”
“Time is money” and “Future money planning is bigger money”
If you don’t have a financial plan at this moment you can choose to get on the train of financial stability by making one now.
Few steps to consider while setting financial goals:
- Know what you want. Make a list of what you want to achieve in the next five years.
- Write down your target net worth in the next five years (for example “I want to be worth $20,000, $50,000, $250,000, or $1 million by the 1st of May, 20__) anything you know you want to achieve.
- Write down possible income sources you need to work on(businesses, investments, stock, services you can offer and get paid) towards achieving your 5-year target
- Create smaller targets to achieve the bigger targets (example: weekly targets to achieve monthly targets or monthly targets to achieve yearly targets)
#3 Know your sacrifices
Every goal has its short term sacrifice, nothing good comes easy. Some people sacrifice 4 or 5 years and a lot of money for college to learn a skill or earn a certificate that will provide for you for a lifetime, some work hard and save up for years to start up a dream business.
To achieve your money targets you’ll need to understand the principle of making short term sacrifices for long term rewards.
Know your sacrifices and be ready for them.
You’ll have to make a list of things or the lifestyle you’ll have to sacrifice to attain your targets. Such as time wasting activities, money consuming activities, unproductive activities, sometimes good activities or things you don’t really need at this point. Take your time and make a list.
#4 Use your motivations
Successful people are motivated by something that makes them want to achieve more. Working towards your money target will get tiring along the way, most people lose focus, and some get discouraged or drop out along the way to success. This is where your motivation backup steps in to fill you with energy and inspire you to push till the finish line.
- Make a motivation list for your money target.
- Write down five or more reasons why you want to achieve your financial targets.
- And also write down what you’ll reward yourself with at the end of each month and each year when you achieve you target
#5 Save a fraction of your income
Saving a fraction of your income is an important part of your future financial security. The habit of saving also teaches you more about money than you think, how to limit your expenses and also enables you to make the best use of what is left after saving.
Towards creating a saving plan, take the following steps:
- Open separate savings account different from the bank account where you make your daily expenses (ask your bank for a money account with the best returns)
- Record the total of your weekly or monthly income
- And Choose a fraction of your income that will go into your new savings account every week or month
#6 Always create a monthly budget
To step up your money game, you’ll need to master the habit of creating monthly money budget. This is so because budgeting helps in making sure that the small money targets that lead to the big targets are achieved.
Budgeting can simply be described as “the plan you make on how your money will be spent” These reasons are why budgeting is key in financial stability:
- Keeps you focused on your money targets
- Helps in fair allocation of your income to satisfy your various needs
- Eliminates unnecessary expenses
- Eliminates debts, since your expenses and savings are well planned within your means to satisfy you needs
Always have an extra allocation in your budget for unforeseen expenses.
#7 Invest your money
Your money will grow at a slow rate or at zero rates if you keep them in the bank or in your safe but making good investments can give you the best returns.
If you’re wondering about how or where you can invest your money, here are ways to find
- Seek for investment advice from a financial expert on available options
- Research and look for good opportunities to invest your money.
Some investment ideas are bonds, real estate and equity shares with an expectation of capital appreciation, dividends, and interest earnings. Others are wine, precious metals and some financial assets such as commodities, hedge funds, film production and a lot more.
You can create a business where you can invest your money and see it grow
#8 Start a business
You can always start a side or full-time business to bring in more income. We all have good ideas or skills that will benefit other people. Invest some amount of money or time into perfecting it and you can start offering your services or products under your brand and get paid.
Business is good because you can start small and grow from there. With hard work and creativity, your business will bring in huge returns.
- Write down business ideas you’ve had or the new ones you find interesting
- Pick out the one you can work on now
- Make a research on the requirements.
- skills you need to learn or hire
- the amount of money and time you will need to invest and so on
- To make it easier for you, get a mentor to learn from, someone who is successful in what you are trying to achieve.
#9 Educate yourself
Several notable people have left their jobs because they earn better income by providing good services using the skills they learned. Some are graphic designers, piano tutors, bloggers, web designers, programmers, freelancers and so on.
Self-education is the best investment you can make.
With so many freelancer sites online, all you’ll have to do is to learn of platforms you can offer your services to people who need them and sacrifice a little time to supply the demand for your service and get paid.
#10 Drop debts
From the first step in this list we can deduce that debt is a liability and it lowers our net worth, and our ultimate aim is to increase our net worth. Therefore debts should be dropped entirely or lowered to the minimum.
Good debts can generate more income over time, such as education loan, real estate, small business or investments. Bad debts generate no income but depreciate with time, such as loan to buy a vehicle, clothes, credit cards loans, consumables and so on.
Whether good or bad debt, No debt is good debt.
- Debts takes more money from the future income
- Debt is a bad habit, it encourages you to spend more than you can afford
Making good monthly money budgets eliminates debts.
#11 Adjust your expenses
One of the best ways to grow your money is to spend less and save more money by cutting down on monthly expenses. You’ll be thrilled on how much you can save in a month if you cut down on your bills and expenses a bit.
50% of growing your net worth is “planning” and “setting money target” and the other 50% is taking consistent actions towards your target.
Do this and you’re half way to your financial success, or leave it and just hope for the best.
Okay! So let’s take out a little time to plan and set targets that will lead us to our financial freedom. It’s always worth it.
Few HOURS of sacrifice, years of satisfaction and reward!
Also, don’t forget, tell us what you think in the comment box.