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Net worth is an important measure of your financial health. Check out the best ways to boost your net worth in 2024.
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Your net worth is a measure of your total wealth, and it’s a good way to see how you’re doing financially. To calculate yours, take the value of your assets and subtract your debts. For example, if you have $25,000 in savings and investments and $5,000 in debt, your net worth is $20,000.
As a general rule, if your net worth is going up, it’s a sign you’re on the right track with your finances. A higher net worth often corresponds with more financial stability, and it could also mean you’ll be able to retire earlier. That makes increasing your net worth a great goal for just about anyone, and there are several ways to make it happen in 2024.
1. Make saving and investing automatic
One of the most common recommendations for improving your finances is saving and investing money every month. For example, you could put $250 in your savings and $250 in your investments. If you set aside money this way, then your net worth will likely go up.
You could do this yourself. But a more convenient option is to automate your savings and investments. Set up automatic transfers to your savings account after you get paid every month. Do the same with your investments, whether that’s through a brokerage account, retirement accounts, or both.
2. Invest in the stock market
Setting aside money is a smart financial habit, but it’s also important to grow your money. Arguably, the most effective way to do that is by investing in stocks. The stock market has its ups and downs, but on average, it has grown about 10% per year going back decades.
Let’s say you invest $500 per month and get an 8% annual return. After 40 years, you’ll have over $1.55 million. You’ll have contributed $240,000 of that, meaning over $1.3 million of that total is returns earned through investing.
If you’re looking for an easy way to invest, check out total stock market exchange-traded funds (ETFs). These allow you to invest in the entire U.S. stock market with a single investment.
3. Raise your income
An above-average income makes it much easier to pay your bills and build your net worth. If you’re able to get a $5,000 or $10,000 raise in 2024, that’s a lot more money that you can save, invest, and use to enjoy life.
The best way to increase your income will depend on your current job situation. Here are a few options to consider:
Talk to your manager at work about what you can do to move up in the company and get a raise.Be on the lookout for job opportunities, including promotions at your current workplace and new jobs elsewhere.Offer freelance services in something you do well, such as web design or writing.If you have enough free time, get a side hustle, such as driving for a ride-hailing service or making deliveries.
4. Manage your debt well
Debt is a major factor in your net worth. When you take on debt, it lowers your net worth. It also costs you interest and ties up some of your money in monthly debt payments.
Not all debt is bad. If you want to buy a home, you’ll most likely need to get a mortgage. This can help your net worth if the home you buy increases in value over time. And if you need to buy a car, you may need to finance it using an auto loan.
It’s unnecessary and high-interest debt that holds you back financially. Here’s how to manage debt:
Pay off credit card debt and other high-interest debt as quickly as possible.Only go into debt for assets that could increase in value (a home) and purchases you need (a car, medical treatment, etc.).Work on building and maintaining a high credit score so you can get the lowest possible interest rates.Plan ahead and save up for big purchases instead of borrowing money for them.
5. Don’t overspend on your biggest monthly bills
It’s hard to increase your net worth if you’re spending 90% of your income on bills every month. A good guideline is to spend 50% to 60% of your income on essential bills.
Personally, I don’t like to micromanage expenses, and I don’t think it’s a good use of time. Occasionally spending $10 on a coffee and a snack isn’t going to have a huge impact on your finances. I recommend focusing on your biggest monthly bills instead. For most people, these are:
HousingFood, including groceries and eating outTransportation (usually owning a car and all its costs)
If you spend more than you can afford on your rent or mortgage, food, or car, you’re putting your life on hard mode. But if you keep your spending reasonable in those areas, you probably won’t have a problem saving money.
It’s exciting to see your net worth go up. If you follow those tips, you’ll see a big increase in your net worth in 2024.
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