What is the best way to increase your net worth? If your first thought was earning more money, this isn’t entirely true. In fact, there are many ways to pad your wallet and it’s important to understand your options so you can choose the best one(s).
While it would be nice, increasing your wealth doesn’t typically happen overnight. It involves hard work, determination, patience, discipline, and commitment.
That’s why it’s important to choose a strategy you know you can stick with. Otherwise, your efforts might be wasted if you’re not motivated to see your plan through.
According to a 2023 wealth survey from Charles Schwab, Americans said it takes an average net worth of $2.2 million to qualify as wealthy. A recent wealth report shows that the top 10% of Americans have a net worth of $854,900 and the top 2% had a net worth of $2,472,000.
The truth is that many of these people are self-made millionaires, meaning they had to work their way up the ladder. This is why you should never think that being wealthy is for other people—and not for you.
Circumstances like age or limited resources shouldn’t be seen as obstacles. It’s absolutely possible to increase your net worth and it doesn’t always require working all hours of the day and night.
3 techniques to increase Your wealth
There are a multitude of ways to build up your wealth. However, there are three primary ones that could help you do so without having to earn more money.
But first, let’s clear something up. There is nothing wrong with taking home a bigger paycheck. In fact, it can increase your wealth building opportunities tenfold. However, overworking yourself defeats the purpose since it can negatively affect your mental and physical health. Is it worth being wealthy if you’re burnt out and miserable?
Here’s how you can increase your net worth without necessarily pressuring yourself to earn more.
Live a frugal life
If you’re content with your lower-paying job or work in a field that doesn’t pay well, consider cutting back on spending. You don’t have to increase your income if the current one provides you with everything you need and want.
According to an article published on MyBankTracker.com, there are several billionaires who choose to live modest lifestyles with frugal spending patterns despite their income. Warren Buffett is just one prime example. By opting out of the many luxuries they can enjoy, they are able to build their wealth and invest in the things that matter to them.
Remember that frugality doesn’t mean you are depriving yourself. You are focusing on the necessary expenses so you can free up more money for the things that will help you improve your financial position.
And if you need to cut back on spending to cover an expensive emergency you will already be accustomed to living on a lower budget. Of course, you can avoid this situation altogether by having an emergency fund.
Do something about your debts
Another way to increase your net worth may be by paying off your debts. The interest rate is probably higher than what you’ll find with a savings account. If you have the extra money, it would likely be better to pay off your high-interest debts.
By stretching out your payment period, you may be wasting a good portion of your hard-earned money. If there is no prepayment penalty, you should consider paying as much as you can each month.
Paying off your credit accounts aggressively could free your from some of your financial obligations. Once a debt is paid off, you could use that money to grow your finances.
Invest your money
Finally, you need to think about investing your money so it can work hard for you. Technically, this shouldn’t be part of this list because you earn money from it.
However, this may be an exception because you don’t always have to do much to make your money grow – at least if you know how to invest properly. This is one of the passive income generators that will not require you to put in a ton of effort.
As long as you have the extra money to invest, you could grow your personal wealth while taking care of other things. You just have to know where to invest it. If you take the time to learn or ask a professional, this could be a great money-making machine for you.
Secret to building wealth
The real secret to building wealth does not solely consist of saving, investing, budgeting, or smart spending. All of these are important, but there is an additional key essential—your attitude.
If you have to focus on one thing, make sure you have the right mindset when it comes to money. You may be exerting a lot of effort to save and budget but if you have a negative attitude, you may find yourself struggling to stick to your plans.
Unfortunately, negative inner beliefs regarding finances are quite common as many people tend to overly fixate on things that aren’t going well. These negative thoughts can overshadow positive thinking and shatter your determination.
Here are some tips to help you change your attitude to “Yes I can.”
Develop a new mindset
Start by changing how you view money by thinking of it as a tool. It should not rule or define your life. Although most people want to be financially comfortable, it should never define your success.
When you stop obsessing about the amount and instead focus on your progress, you will likely find it easier to come up with a strategy to build up your bank account.
Control your finances
Something else to keep in mind is that YOU should be the one controlling your finances, not the other way around. Your finances should not dictate how you live your life or how happy you are.
For instance, debt should not keep you from quitting a stressful job and waiting to find a new one. You should set up your life and financial habits in such a way that will give you the freedom to do what is best for your mental and physical health. This will only happen if you get your personal finances under control.
Identify the mistakes of the past
If you’re in debt or have other financial issues, make sure you understand how you got into this tight spot. Once you identify your mistakes or negative thinking, it should be easier to avoid them and prevent the situation from repeating itself.
Know the habits you should develop
As you are identifying these mistakes, you should also understand the habits you need to avoid. For instance, impulse spending is never good when you owe money—no matter how much you think you want the item at the time. Forming the right habits can help you make better choices. Once you get the hang of them, they will become a natural part of your spending pattern.
Surround yourself with people who have the right attitude about money
Finally, you should try spending time with people who have the attitude or financial goals you want to emulate. That way, you can follow what they are doing and possibly get some sound advice.
