Having a high net worth creates opportunity. Whether it’s moving you into a new income bracket, making new connections, or just securing your financial future, being intentional about growing your net worth is well worth the effort.
If you want to start growing your net worth but don’t know how, here are nine simple strategies you can use to improve your net worth right now.
1. Pay off your credit cards
The quickest way to increase your net worth is by reducing your debt as much as possible. If you’ve made mistakes in the past and are carrying credit card debt, now is the perfect time to do something about it. You can compare the debt snowball vs. debt avalanche to see which method will work best for you so you can pave a path towards being debt-free.
2. Create an emergency fund
Trying to grow your net worth without a safety net means all your hard work could be wiped away instantly. Create an emergency fund that can be used when you most need it, like for emergency car repairs, plumbing issues, medical emergencies, etc. That way, you’ll never have to worry about how you’ll pay for the things that can’t be avoided.
If you don’t have an emergency fund now, start with a goal of $1,000. After that, opinions vary between having six months and a year’s worth of expenses covered, so consider what would be a realistic savings goal for you.
3. Get rid of your student loans
Like credit card debt, student loans can weigh you down and reduce your net worth. Make a plan to get rid of them as soon as possible. Both the snowball and avalanche methods can be used on student loans, too, so create a plan to pay them off so you can move on quickly.
4. Max out your 401k and IRA contributions
Increasing your contributions to long-term investments like your 401k and IRA is a smart way to ensure financial stability for your future. If your employer offers a 401k match, make sure that whatever contributions you make hit the maximum of what they’ll match to secure that free money.
5. Value your time
Time is money, so if you want to start growing your net worth, you’ll need to begin valuing your time. Adding a dollar amount to your time does two things:
First, it helps you better value the effort of your work. If you feel your time is worth $35 an hour, you’ll stop taking jobs that pay less than that rate. Consequently, you’ll begin seeing new opportunities come that pay more and remove much of the stress that comes along with being undervalued.
Next, you’ll stop seeing your purchases as a cost in dollars but instead as a cost in time. How many hours will you need to work to cover purchasing that new thing you want? Is it worth that amount of time, or could you instead use it in a way that’s more representative of how many hours you’ve put in to earn that money?
6. Use debt strategically
Debt is not always negative; it can be used as a tool to increase your net worth. If you can see debt as a strategy and not a burden, you can leverage it to your advantage.
Your goal should be to use debt as a way to buy assets and not liabilities. Invest in things that can improve your quality of life, like education or a home, instead of frivolous purchases that don’t produce value. It takes discipline to use debt this way, so don’t try this method if you’re an impulsive shopper or are just starting to focus on growing your net worth.
7. Diversify your investments
An investment strategy should utilize a variety of investments that vary in their level of risk. Typically, portfolios for people with high net worths include varying amounts of cash, stocks, and bonds that are rebalanced throughout their lives. If you’re under 40, you might want to diversify your portfolio to include more high-risk stocks. If you’re over 40, you may want to have a portfolio that has more bonds and cash than stocks so that you’ll have a steady stream of money through retirement.
8. Create multiple income streams
If you want to build your net worth quickly, consider padding your income with additional revenue streams. There are a variety of side gigs you can do to increase your income, like consulting, gig work, flipping antiques, and so on. Having multiple income streams also means you’ll be shielded from any financial upset that comes along, like job loss or emergency bills.
9. Buy property
Whether it’s a single-family home on its own land or a condo in an apartment complex, owning property is a fantastic way to increase your net worth passively. When you buy a property, you begin to accrue equity, which is a cut of the total land value minus any outstanding mortgages or loans. Property typically grows in value over time, and the more equity you have, the more your net worth will increase.
Taking steps to increase your net worth has a ripple effect that can make your life more comfortable now and in the future. Give a few of these methods some consideration and see which works best for you. Above all, start slowly and add more as you go so that you’re never in over your head.