When it comes to financial health, one of the most telling metrics is your net worth. Think of it as a financial compass that guides you toward wealth-building success. Growing your net worth isn’t just for the wealthy elite. It’s a tangible goal for anyone determined to amplify their financial security and independence.

In this post, we’ll go over three basic yet powerful strategies to grow your net worth this year. Remember, your financial journey is a personal one, and with the right tools and motivation, you’ll be able to achieve some pretty impressive things.

1. Start Tracking Your Net Worth

This is the first and often most overlooked step when it comes to being able to grow your net worth. Many people don’t even know what their net worth is. You don’t have to be obsessed with following your net worth. But, what you focus on will increase. It’s best to start tracking your net worth monthly – perhaps when you review your budget or spending at the end of each month.

Your net worth is just your assets – liabilities so it should be very simple to calculate. Just realize that the first time may take you a little longer to gather up all the figures. Begin by calculating your current net worth: list all your assets (what you own) and subtract your liabilities (what you owe). Here’s a list of common items to include to help you get started,

Assets

• Investments
• Real estate
• Savings bonds
• Value of your vehicles
• Value of your home
• Retirement accounts
• Cash (checking and savings)
• Jewelry and valuables

Liabilities

• Student loans
• Car loan
• Mortgage
• Credit card debt
• Personal loans
• Home equity loan
• Credit card balances

By tracking your net worth regularly, you will start to pay closer attention to these two categories so you can focus on improving them. It’s a simple yet effective way to get set up to grow your net worth this year.

2. Find Ways to Increase Your Income

Your income is the engine that fuels your net worth growth. It impacts your net worth indirectly since you can earn a ton of money but still have a low or negative net worth. Net worth is more about what you keep or own and not what you earn. However, earning more money and using your income strategically can help you save and invest at a better rate to grow your net worth over time.

When it comes to increasing your income, you can always save more by trimming expenses, but increasing your income has limitless potential. Here are a few ways to rev up that engine:

• Consider Side Hustles: Can you offer a skill or hobby as a service? Side hustles are like bridges allowing you to cross over from where you are to where you want to be financially.
• Advance Your Career: Pursue promotions or switch to a higher-paying job. Don’t shy away from further education or professional development opportunities that can set you apart in the job market.
• Negotiate Like a Pro: If you’ve been adding significant value to your company, it’s time to negotiate your worth. Do your research, present your case confidently, and remember, the answer is always ‘no’ until you ask.

3. Pay Down Debt

Debt can be a heavy anchor that limits your disposable income and reduces your net worth. Paying down debt will always grow your net worth and increase your assets. However, it’s not always an easy process. It’s important to have a clear and realistic goal as well as a plan to pay down debt. Here are some tips to help.

• Implement a Budget: Control your spending with a budget that accounts for your debts. Start tracking your spending and limiting unplanned purchases to avoid future debt. Then, budget for debt payments so you don’t feel like you have to squeeze extra cash out to get ahead.
• Cut Unnecessary Expenses: Next, identify and eliminate excess spending. Every little bit saved can be redirected to reduce debts more rapidly. Look at your lifestyle and see where you can cut costs even if it’s only temporarily. You may even be able to find more frugal and affordable ways to keep certain hobbies and expenses so you can still save.
• Strategize Debt Payments: Consider methods like the debt snowball or avalanche techniques. The snowball method focuses on prioritizing paying off the smallest balance first. Then, work your way up to the larger balances. With the avalanche method of debt repayment, you focus on repaying the balance with the highest interest rate first to save on your overall loan costs. Whichever you choose, the aim is the same: eliminate debt efficiently to clear the way for net worth growth.

Summary

These three steps to grow your net worth can be tackled as soon as possible. Start today by simply tracking your net worth and making a plan to pay down debt. Growing your net worth takes time and persistence, but it’s well worth it in the long run.

Learn more about budgeting and managing your money for success by downloading the free guide.