Your net worth is ultimately the monetary value that results from subtracting what you owe(your liabilities) from what you own( your assets). It can also be referred in another way as the amount of years you can live without working a single day, your daily expenses being the same . People may have flashy cars or big houses and staff, but the true value of wealth is expressed by a person’s net worth.
To put it into context, the richest people in the world are refered to as high networth individuals. They are graded in accordance to their networth. Their networth being the difference in monetary value between their assets and their liabilities.
The financially wealthy focus on their networth and thus it grows bigger and bigger. They acquire more and more assets which in turn produces more money for them that is significantly higher than their liabilities henceforth increasing their networth.
There are mainly 4 criterias which contribute to building a person’s networth which are; working income, saving, investing and finally life simplification. These criteria are uniquely different to each other, but are crucial in building one’s networth.
Focusing on only one of these criteria won’t get you anywhere of significance as far as networth is concerned. Each of them has to be employed effeciently so they form a connected network that builds your networth. Let me explain each of them to you.
Working income
Working income is the money you earn from physically doing work or the money you earn by trading your time. This include activities like your day job and all activities that involve you trading your time for money.
Working income is crucial in building your networth.Working income is important because it provides the basis to which all the other criteria for building networth lie.
Saving
Building your networth has more to do with saving than any other factor. Saving effeciently entails that you have a good money management system. The more you can save the faster you can build your networth.
Saving will allow you to increase your money that will be available for investing which will in turn increase your income and therefore increase your networth.
Investing
Investing is one of the best tools for increasing your networth. It is so because investing allows you to create passive income. Passive income is money that you earn without trading your time. It may seem daunting or complex, but be reminded that everything is learnable and you can improve at anything.
Investing in its self allows you to create multiple sources of income which will increase your networth faster than you could have ever imagined.
Life simplification
Simplifying your life as far as money spending is concerned is the simplest way of increasing your networth. It only depends on your self-discipline to limit your spending mainly limiting your wants for your needs.
At times you should realise you don’t really need to live the lavish life of expensive houses, cars, clothes… e.t.c to be happy. All you need is to be creative for you to be happy, living your life with what you have. This in turn will allow you to decrease your cost of living and therefore increase your networth.
Actions
Start saving at least 10% of your monthly income.
Make a commitment to only use these savings for investing and start investing as soon as possible.
Research ways you can create passive income and put them into action.
Make a commitment today to start building your networth and don’t look back.