4 Simple Ways to Boost Your Net Worth

If you don’t understand why it’s important for you to track your net worth (yes, your net worth), it’s because your net worth is a good indication of your financial standing. It’s also pretty easy to arrive at: all you need to do is subtract the value of your liabilities from the total value of your assets. It’s common to see the media report the net worth of various celebrities from time to time. So, it’s understandable if you feel the only way to build net worth is if you’re earning a large salary every month. Also, contrary to what you read in the news, having luxurious mansions and fancy cars doesn’t automatically mean you have a solid net worth. In this article, we’ll tell you four simple ways to boost your net worth: 

1.Find Out Where You Stand

The first step in calculating your net worth is finding out where you stand. Your current net worth will give you a fair idea of how good/bad your financial situation is, and you can take measures to improve it if need be. First, you’ll need the total value of all your assets. These include the money in your savings account, your investments, and the assets you have (if any). Whatever money you’ve invested for your retirement corpus will also figure. Next up, add all your liabilities. These include all your debt, like education loans, unsecured personal loans, or credit card debt (if any). To arrive at your net worth, subtract your total assets from your liabilities.

2.Adopt Measures to Eliminate Debt

If you currently have a considerable amount of debt (like high-interest credit cards or unsecured personal loans), your net worth will be negative. The only way to improve it would be to work towards eliminating as much debt as possible. An effective way to do that would be to start with the costliest debt (the one having the highest interest) first and clear it off. Once that’s done, you can move on to the next debt. As your debt decreases, your net worth will slowly start increasing.

3.Cut Down on Wasteful Expenditure

Eliminating unnecessary spending will go a long way in helping you save money. Saving money and staying out of debt are linked to each other, because the less debt you have, the more money you can put towards your savings. At the same time, incurring wasteful expenditure reduces the money you have for emergencies, which prompts you to take on debt like an unsecured personal loan. That's why, even after clearing all your debt, it's a good exercise to figure out the areas where your spending is relatively high. You can then work on ways to bring it down.

4. Save Up for Retirement

How much you’ve saved up in your retirement corpus is also an asset that can bring up your net worth. So, if you haven’t started on your retirement corpus yet, it’s a good time to do that now. You’ll be building essential savings for retirement and bringing up your net worth as well – killing two birds with one stone, essentially.  
 
Wrap Up

The four points will help you bring your net worth up gradually, so it’s important to be patient. You need to focus on clearing out as much debt as possible while not taking on any more wasteful expenditure.

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