June 4, 2007

THREE PRACTICAL WAYS TO INCREASE YOUR NET WORTH

If your out-go exceeds your in-come,
your upkeep will be your downfall.
— Unknown


Here are three practical (i.e., boring) ways to increase your net worth.
  1. Save More (Spend Less)
  2. Earn More
  3. Invest Better
Save More
The best technique is to "pay yourself first". Have a portion of your pay (e.g., 10%) deposited into a savings vehicle from which withdrawals are more difficult. You're less likely to spend money you don't see. Similarly, you can save a salary increase (or a portion of it) instead of spending it.

For those who don't payoff their credit card balances each month, an idea to pay for everything with cash. You keep one credit card for emergencies and cut up the rest. Put this credit card in a metal can, add water and freeze. Why? If you're tempted to make a purchase, you'll have to wait until your card thaws. By then, the urge to spend may be over. Why the metal can? So you can't use your microwave oven to reduce the wait time.

Earn More
You can increase your income by learning more and applying what you learn. I listen while driving in my 'university on wheels'. Traffic jams are no longer annoyances. They're an opportunity to listen longer ;)

Learning is also a strategy for remaining employable in the uncertain days ahead. Learning doesn't have to be in a classroom setting. You can learn plenty online for free using your favourite search engine. Blogs are an excellent --- and interactive --- tool.

Invest Better
Investing is a contentious topic. Who doesn't have an opinion or two? Relying on the advice of others over the years, I've lost money in shares, mutual funds, warrants, etc. Our current focus is paying off our mortgage while getting better educated about investing.

Interconnections
These ideas are related. Saving more and learning more help in investing better. Learning more is a form of investment. You can can the increase in your earnings from the increase in your learning.

Do you have other practical tips?

5 comments:

FourPillars said...

lol - I love the metal can idea.

Promod said...

Me too, fourpillars :)

I forget the source and can't give credit.

Big Cajun Man said...

Once you stop learning, you stop living. Learning is an every day kind of thing, and listening to books on cassette or CD that you borrow from your library is a great way to learn, I do that every day.

Cut out a vice as well. Set up a latte savings plan, by not buying a coffee a day, and putting the money aside, see how it adds up.

Promod said...

I'm glad you're also a learner, Big Cajun Man. Listening to books also improves listening skills ;)

Small daily expenses do add up and are easily ignored. The Latte Factor from David Bach is a memorable example.

I'm baffled when I see people who aren't rolling in loot buying lunch, premium coffee, and even bottled water. The dollars vanish quickly.

WealthWebGuru said...

You talk about it but everyone needs to know that one of the best ways to increase your net worth is to REDUCE DEBT. The definition of net worth is everything you own less everything you owe. Simply owing less increase your worth. I think the financial industry is biased to recommend increased savings but they have a conflict when it comes to reducing debt because they make money by increasing debt. We need more messages promoting less debt increases net worth!