Your net worth is the difference between the value of your assets, such as your house and savings, minus your liabilities, such as debt. This number is a good indicator of your financial success and stability, that’s why it’s important to keep track of it.
We all want to increase our net worth, to afford a certain kind of lifestyle, live without worry, and safeguard our future and children’s future. We have compiled four easy ways to reach this goal:
- Reduce your debt:Easier said than done, of course. Sometimes we splurge with a credit card or we need cash quickly, so we take out a loan. You don’t have to eliminate your debt all at once, you can start by putting a feasible and realistic plan to reduce it. Credit card debt, student loans, car loans, and mortgages all count against you when calculating net worth. Start with the items with the highest interest rates, then move your way down until you’re debt free.
- Save save save:Don’t know where to start saving? Do a budget review and see where you can cut back. This can include larger expenses, such as selling large items you’re not using, or smaller expenses such as reducing nonessential expenses. A few pounds here and there can add up in the long term. Focus on your annual costs that are bringing your net worth down and see if these can be trimmed or eliminated. Whatever money you save, you can invest or put into a savings account. There are plenty of apps and websites out there that can help you track your spending and point out where you can be cutting back.
- Make use of your bank: Sadly in Egypt the majority isn’t bank savvy, we’re not aware of the multiple products and services available to help us save or how to receive funding with low interest rates. There are multiple ways to save your money and build your wealth through your bank. Opening a savings account can help you build wealth off of the money you already have. As the money sits in your account, it will earn interest as long as you leave it there. By putting money into your savings account regularly, you can build up some capital in no time.
- Investing isn’t just for businessmen:Investing in assets like stocks, bonds, mutual funds and real estate is a great way to grow your wealth, but you need quite a large amount of capital. Income investing can increase your net worth if done right. You can invest in stocks by hiring an advisor or a brokerage, or if you know the stock-buying game, you can do it yourself. The key to making money in stocks is remaining in the stock market. A mutual fund is a type of investment that pools together funds of many investors and uses the assets to invest in a group of assets. As you might guess, there are many different types of mutual funds available.
While the basic steps to building wealth seem simple enough – make money, save money and invest money – they’re complex in practice. If you find yourself becoming overwhelmed with options, it’s worth hiring a financial advisor or enlisting a trusted financially literate friend or family member to make the best of your assets and reduce your expanses.