According to the Federal Reserve, the net worth of households and non-profits rose to
$86.8 trillion during the fourth quarter of 2015.
Did your net worth go up as well?
If you don’t know the answer, then you can incorporate these five habits to effectively measure and monitor your personal net worth:
1. Do the math.
Your net worth is defined as assets minus liabilities. The back of a napkin is sufficient enough to calculate everything you own (assets) and subtract everything you owe (liabilities). However, it would be “cleaner” to use Excel to ensure your math is more accurate. An extra zero could yield overconfidence or despair.
There are plenty of resources for you to monitor your net worth. If you would like help, many accountants and advisors also have tools to help you manage your net worth. As net worth planning becomes more and more popular, you will start to see many more helpful resources come into the marketplace.
3. Pay down debt.
You can easily increase your net worth by aggressively paying down debt. Remember, debt and liabilities are synonymous. Call it what you want; they both reduce your net worth. If you ignore the debt problem, the penalty is not only accrued interest but also a low net worth statement: “…the naïve proceed and pay the penalty.” Proverbs [27:12]
4. Save More.
You can save $25 per month and you know it. If you have above-average income, you know you could save more as well. This is not about math. This is about discipline. Take the time and find a way to carve out 10 to 15 percent of your gross income and apply toward saving.
5. Start a business.
One of the most effective ways to increase your net worth is by starting a business. This includes buying real estate. Know, however, there is risk involved. If you have done your homework, are willing to pay the price and have sought wisdom in the counsel of advisors (see Proverbs [15:22]), then go for it!
Time will reward your net worth statement when combined with diligence and discipline. Start measuring today!
This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.