Your net worth is a measure of your wealth, the value of the assets that belong to you. Increasing your net worth goes beyond having bragging rights, the benefits of a high net worth are numerous! The most crucial benefit that’ll encourage you to increase your net worth is the financial stability that comes with it. That way, you’re more confident with your expenses and can easily take care of emergencies.
In this article, we list eight action steps to help you increase your net worth steadily within a short period of time.
1. Save on payday.
Saving on the day you get paid helps you make the saving decision faster. When you decide to wait for a few days, unexpected expenses can get in the way of your savings. In most cases, these expenses could have been avoided if the money had gone directly into locked savings plans. Save the set percentage of your cash as soon as you have earned it to increase your net worth by a milestone.
2. Read financial books.
You do not have to navigate through the financial journey on your own or make huge money mistakes when there are people who have gone through that path and have written about it. Learning from them helps you go far at a faster speed. Reading quality money-focused books will help you make rich decisions where money is concerned.
Ope’s Money Diary is a major financial book that will help you understand exactly how money can work for you using 21 short and relatable stories. Unlike most financial books, it’s super fun to read.
Remember that your money moves are as good as what you feed your mind on.
3. Delay purchases by 48 hours, at least.
Delaying your purchases is a great way to help you manage your expenses and to enable you to make savvy decisions on your money. Whenever you feel the urge to buy something that’s not on your budget list, delay that purchase by at least 48 hours. In fact, there is a 30-day rule that states that you should delay your purchase by 30 days, then only proceed to buy it if you still need it after that period.
Money not spent is money saved. If you can learn to delay instant gratification, then you will be able to save more money, which will help increase your net worth faster.
4. Invest with the right channels.
One of the fastest ways to lose all your money is by choosing the wrong platform to invest your hard-earned money. Investing in Ponzi schemes can mar your finances and recovering from it can be quite difficult. Make your research to choose a secure and trusted investment platform and the investment option that will work for you.
We’ve made the process quite easy on Cowrywise. Simply take a risk assessment here to understand what kind of investor you are and we will suggest the best investment options for you based on your investor type. Super seamless.
5. Keep your monthly bills as low as possible.
Take an honest look at your monthly bills and ask yourself, “Which of these bills can I do without?” Then proceed to take them out. Paying for subscriptions you do not use and settling bills you don’t need eventually compound on your earnings and make you spend much more than necessary.
Make deals that will help you cut back on the expenses you make daily as much as possible. 💯
6. Build an emergency fund.
Emergency needs are a huge part of life; they always arise. When building up funds for important life goals, sometimes we unintentionally view these funds as emergency funds as well. So, whenever urgent needs arise, we quickly settle them with money that has been saved up. This is an unending cycle that hurts your net worth.
Money saved and invested should not be used to cater for emergencies. Instead, work to build an emergency fund. How can you get this done?
- Work towards saving up 3 to 6 months of your living expenses.
- Once it matures, move it to an account set aside for emergencies.
- Don’t stop. Make it a continuous process.
Choose to set money aside for urgent needs today and watch your funds grow.
7. Earn compound interest.
We explored this fully in our previous article, “What is compound interest? How does it work?“
Compound interest is the interest earned on both the initial investment capital and the returns earned on your capital. Simply put, both your capital and your returns start earning further returns. What makes compounding your interest possible is Time x Interest Rate. When you earn interest on your savings or investments, you put your capital together with the returns earned into further investments.
The longer you do this, the more your money can grow in value due to compound interest. And the more your money grows in value, the more your net worth increases.
8. Plan for miscellaneous expenses.
As much as it is advisable not to spend money without a purpose, it’s unavoidable to have such unplanned expenses. This is why you need to make plans for it in advance. Have a percentage of your earnings that goes into gifting, cravings, etc. Stick with that and don’t spend beyond that.
Are there other habits you think are beneficial in the wealth-building journey, and would help increase your net worth? Share with us in the comment section. We’ll like to learn from you!