7 Ways To Increase Your Net Worth

The stock market has been on quite a run. This boom isn’t new – the market has been doing quite well since January of 2015. Just looking at the S&P 500, we see that it has clocked up 24%. Include dividends, and that number jumps to over 30%.

Investors and 401(k) participants, so as long as they’ve been participating during this time, have seen a real rise in their net worth, or the total value of their assets minus any liabilities. This important figure is a quick gauge of just how well you’re doing financially and can help guide you towards decisions regarding debt and towards setting your next financial goal.

No matter where your net worth is these days, there are always things you can do to boost that number. Here are seven steps you can take to help you increase your net worth:

1. Review your assets: Here, I find net worth tracking tools particularly helpful. Why? Because oftentimes they can automatically update information that fluctuates regularly, like your checking account or investments. GetWela.com is a great resource for online tracking of your net worth. They trace both your assets and your liabilities, giving you a clear picture of the progress you’re making.

If you are not comfortable with online tools, you can always use a good old fashion spreadsheet or pen and paper to arrive at your number.

Your main asset classes include:

  • Investments – Any tax-deferred retirement plans, along with traditional brokerage accounts that hold stocks, bonds, ETFs, etc;
  • Real Estate – Your primary residence, vacation property, rental property, and raw land;
  • Business ownership – Your closely held or private business. These can be difficult to value sometimes, but, for many business owners and entrepreneurs, this category is your biggest asset. It’s important to always be realistic about the “salability” of the business, and here, business brokers or business valuation firms can be a great resource to help you pinpoint a value;
  • Collectibles – Your collection of art, antiques, jewelry, and so forth. The value of these items will fluctuate, so it’s good practice to periodically meet with an appraiser, who can give you accurate, current values for your pieces.

Check Out: 6 Non-Monetary Inheritances We Can Leave For Our Children

2. Review your liabilities: Are you paying on debt each month? How much is it? Have you paid any off completely? It’s good practice to review your current debt every month. This includes your mortgage, second mortgage, credit card debt, auto loans, student loans, etc. By keeping track of exactly how much you owe to others, you get a real number for your liabilities, and therefore a more accurate number of your net worth.

3. Trim your expenses: Rare is the family that can’t cut down monthly expenses somewhere, somehow. Each and every one of us is probably paying for something that we don’t really use or need.

Think about magazine subscriptions, your Audible membership, or clothing services like Stich Fix. Cancel “extras” like these if you can live without them. And get honest with yourself. Are you holding on to that gym membership but haven’t been in six months? It’s time to cancel. Plus, these days cable is almost obsolete, and services like Hulu, Netflix and Sling TV can provide similar services for a fraction of the cost. See where you can trim back or rein in your spending, even in small ways, to help your net worth grow throughout the year.

4. Reduce your debt: This step works wonders to grow your net worth. Of course, the less debt you have the greater your net worth. My approach to taking down debt is to identify your highest interest debt and pay it down first. Another approach is to consolidate payments or simply increase your payments each month.

5. Pay off your mortgage: While some people consider mortgages “good debt,” owning your home outright can be your biggest asset while eliminating your largest liability. And not only is it good for your financial health, owning your home free and clear could also boost your emotional well-being. In my research on retirement and happiness, I’ve found that the happiest retirees don’t have mortgage payments.

6. Review your annual costs: Do you have any unnecessary annual costs? My suggestion is that you take a look at things like your insurance and healthcare premiums each year. Compare rates to see if any of your annual costs can be trimmed down. Every dollar counts.

7. Invest: I’ve written before about the power of compounding interest, so we won’t delve into it here. However, a great way to grow your net worth over time is to make your money work for you. For an in-depth directive on my investing principles, pick up a copy of my book, You Can Retire Sooner Than You Think.

Following the above steps will not only provide you a picture of your current net worth but hopefully also guide you as to how to increase it.

Check Out: Creating Income In Retirement With Your Investments

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