Get to know your net worth! Track it on a regular basis. Your net worth is the difference between your assets and debt (liabilities). It’s THE number that shows you where you stand financially at any given time. Net worth is the value of all your assets (house, 401K, cars), minus the total of all liabilities (mortgage, car loans…etc.). Put it in simply, your net worth is what you own minus what you owe. Watch it on a regular basis as it can help keep you updated on the progress you’re making toward your financial goals and freedom…or warn you if you’re in trouble.
Main ways to improve your net worth:
You should budget meticulously! Set a reminder to log in to your financial accounts daily and ensure you are categorizing correctly in all your different areas. This allows you see where every dollar is going and what it’s going to.
Cut expenses: live below your means by reducing and eliminating expenses and debt.
Set up for alerts on your bank/credit union and credit card websites for things like low balances, unusually large transaction, payment due date reminders, and daily account balances. And make a quarterly date with yourself (and your spouse or partner, if you’ve got one) to look at your financial picture.
Pay Off Your Debt! Money you owe could be used to increase your net worth. Pay off all your debt as soon as you can. But make sure there are no early payment penalties (typically on mortgages).
So it’s always important to know your bottom line. Gather up all of your financial statements including bank accounts, bills, mortgage statement, credit cards, pay stubs, and enter the details into a financial software program. Include the current balance, interest rate, monthly payment and limit. Also enter the current value of your car, house and major pieces of jewelry or art. The financial software will subtract your liabilities from your assets to determine your net worth.
In conclusion, increasing your net worth is not something that will happen overnight. It requires meticulous and careful planning and the will and desire to succeed. With a little planning and determination, you can improve your finances and provide you and your family with a financially secure lifestyle today and well in to the future.