5 Simple Steps For Growing Your Net Worth From $0 to $100,000
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Financial literacy and the ability to understand and effectively use and save money for the future are skills most of us need to learn on our own. How to handle money and assets is not taught in schools and is seen as a touchy subject by society, so most people never really learn. Beginning to really look at your finances and growing your net worth may seem incredibly daunting at first but once you organize your assets, make an achievable plan, and are patient, reaching even the lofty number of $100,000 is a goal that is within reach.
$100,000 may seem like quite a random number but there is a reason why you should strive for this amount. It’s a goal that feels big yet is quite attainable when starting from square one; a good beginning for getting a foothold on your financial independence.
Usually saving up this amount takes years and years but once that threshold is reached, compound interest skyrockets that value at an increasingly faster rate every single year. Once you get to $100k, your savings amount will have the potential to grow exceedingly quickly.
So, what exactly is net worth? Technically speaking, it is the total value of everything an individual owns, minus the total amount of debt. This value is also the simplest indicator of your financial well-being.
Armed with the following steps and some willpower, you can start getting on the right track to hit your goals.
5 Tips To Grow Your Net Worth From $0 to $100,000
1. Budget and consolidate costs
The most straightforward way to grow your net worth is looking at your costs, or why your money is currently being spent. Although this sounds incredibly intuitive and simple, reducing expenses is not an easy job. Merely existing is expensive but the best way to go about this is to learn to budget. Find out how you are spending your money right now, at this moment, and decide which ones you prioritize.
Necessities, from housing costs to medical bills and debt, should fall higher on the list and wants or luxuries, like eating out or pricey clothing, fall lower. Finding ways to lessen all costs, starting with the wants, is a great way to start.
If you have debt, consolidation is also an option, negotiating lower payments and rolling multiple debts into a single payment.
2. Start a savings plan
Saving goes hand in hand with learning how to spend. Once you find ways to cut back on your spending, you need to begin to think about a savings plan. Having savings prepares you for unexpected emergencies like home repair, job losses, or health setbacks.
The key to saving is creating reasonable goals and being consistent. If you keep saving, little by little, the growth will accumulate over time. Don’t get impatient! Everything good comes with time.
3. Start thinking about investing
Start thinking about how you can have your money work for you. Start by asking your trusted friends and family to point you in the right direction.
Investing seems frightening to someone without any experience, and it definitely can be. Make sure you’re keenly aware of the risks of being in the markets. However, there are some entry-level tools worth considering for getting your feet wet, tailored to beginning investors.
One example: Robo investment services that are easy to set up.
Acorns, for example, helped me start saving more money by investing in ETFs without really ever having to think about it.
Acorns is a robo-investing platform that is designed to be easily understood and accessible. It uses “round-ups,” rounding transactions to the dollar and investing those cents every time you make a purchase to consistently and gradually invest, and a choice of smart portfolios to suit your needs.
Betterment is another wonderful robo-investing platform for beginners that is intuitive, user-friendly, and allows you to dip your toes into investing.
4. Real estate investing without home ownership
Once you find your bearings in investing, you will understand that the key to a successful portfolio is a diverse one, and real estate is a great way to go. However, personally making a real estate purchase is expensive, confusing, and requires maintenance.
Luckily, you can easily invest in real estate without having to deal with the troubles of buying a house. For example, RealtyMogul is an online real estate company that allows even non-accredited investors to have access to private real estate deals. The site is easy to navigate, there are IRA accounts available, and the minimum investment is incredibly low.
5. Diversify your income streams with a side hustle
Time is money.
Nowadays, having only one job no longer cuts it. With the current shaky economy and limited salaries of most occupations, having only one source of income hardly makes enough. Especially if one needs to support a family. In fact, 53% of workers now believe a second side hustle is necessary for financial stability.
A side hustle can also be very fun. Starting one puts you at the steering wheel, you get to be an entrepreneur while keeping the safety and security of your day job. You can also use this as an opportunity to look at your interests and have fun while making it profitable.
Once again, you need to create an achievable and time-constrained plan. Starting small, so that you can manage it, is a wonderful way to dip your toes in. Also, there are side hustles that are more hands-on, like freelance writing or graphic design, or passive income hustles that do not need as much attention, like creating an online course or renting a room with AirBnb. Get brainstorming, the sky is your limit!
When it comes to financial literacy and health, now is the time to start.
Keep learning and keep at it, you will reach your goals.