Building a strong net worth is something that takes a lot of time and effort. Many people are unsure of how to build wealth over time. Others simply do not have the discipline to follow through with their plan. There are several different strategies that people can take on in order to build a strong net worth. Here are several tips for anyone looking to increase their net worth this year. Debt Management
Debt is one of the biggest things that prevent people from building a strong net worth. The average person in the United States has tens of thousands of dollars in credit card and student loan debt. Although student loans have a fixed interest rate, many credit cards have very high rates of interest that can add up quickly. Anyone who has a lot of debt is going to have a difficult time building wealth. The worst kind of debt comes from consumer purchases that do not add any value to their net worth. There are some debt purchases that may make sense, like purchasing a rental house or business. However, when people go out and buy new clothes or other accessories on credit, it will be very difficult for them to build any real wealth over time. Increase Income One of the best ways to build up your net worth this year is to increase your income. A person's best wealth building tool is their income. If someone is only making a couple thousand dollars per month, no matter how well they manage their money it is going to be difficult to build any significant amount of wealth over time. Increasing income is much easier than many people believe. There are a variety of online websites that allow people to work as a freelancer. Many companies have also started hiring part time work for those that want a second job. However it is accomplished, increasing income is a great way to get started building a strong net worth. Investing Investing is one of the most important aspects of building wealth. Even with a high income and low debt, without an investing plan it is going to be difficult to truly build a high net worth. There are many people that have little to no knowledge in the area of investing. For some people it may be a good idea to hire a professional to manage their finances in order to build a strong net worth. However, there are some simple strategies that many people can take on to get started building wealth today. Anytime the company that you work for offers a match on your retirement account, it is a good idea to contribute up to that match. This will usually be five to ten percent of the income that you earn through a job. After this is done, you should start investing in a broad range of asset classes that provide a good return based on the risk that you take on. Many people will simply purchases index funds that mimic the entire stock market. There are many studies that show this is one of the most effective ways to invest. Final Thoughts Building a net worth is difficult to do for many people. However, there are several steps that anyone can take to move in the right direction. Paying off high interest rate debt is a good place to start. In order to have money to invest, it is a good idea to work on increasing your income and reducing any unnecessary expenses. Anyone can build a strong net worth this year if they will map out a solid plan and follow it. Jonah Engler is a financial expert from NYC.
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AuthorJonah Engler is a New York based entrepreneur with a passion for stockbroking and coffee! Check out his pics on his instagram! Archives
December 2015
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