If you really want to build your personal net worth, that will take some hard work. Unless you won the lottery, this is not something that you can accomplish overnight. It is a lengthy process that you have to painstakingly go through.
According to the data found on Fool.com, the age group that has a highest median net worth are those between the ages 65 to 69 years old. They have an average of $194,226. Most of this worth seems to be tied to their home’s equity. When this is removed, they are only worth $43,921. The age with the next highest net worth is between the ages 60 to 74 years.
Those who are less than 35 years old, their net worth is only $6,676. Those between 35-44 years, they have a net worth of $35,000. The next age bracket of 45 to 54 years has a net worth of $143,964. It seems that the trend is that we grow our personal net worth as we grow old. As long as we keep contributing to our savings or investments, we can benefit from the growing financial position as we age.
Obviously, time has a role to play when you are trying to build your wealth. However, you need to seriously understand the value of time if you want to be successful in growing your financial worth.
How time management can boost your chances of building wealth
So how exactly can time management help you boost your chances of wealth building?
Time, as we often times forget, cannot be taken back. If you decide to spend 5 minutes of your time browsing the Internet, you cannot take that 5 minutes back. According to an article published on MoneyNing.com, the rich people understand this. They are not obsessed with saving a small amount on every purchase. They do not waste their time on getting discounts and freebies. Although these do have their rewards, the financially successful people know that there are better ways to spend their time. Basically, the article discussed that instead of spending an afternoon looking for a good bargain and comparing prices, the rich spend the time doing a side gig or some freelancing to earn extra.
Here are three ways that time management can help you build your personal net worth.
Think about the time your will spend working to buy something.
This is one technique that will discourage unnecessary spending. If you are tempted to buy a pair of jeans worth $150, think about the number of hours that you will spend working to earn that amount. If you earn $25 an hour, that means you need to spend 6 hours working to buy that pair of jeans. If you believe it is worth it because your favorite pair of jeans is too worn out, then buy it. However, if you feel like you do not want to spend 6 hours working to buy that item, then it may not be necessary after all.
Stop wasting your time on small savings that require a lot of effort.
Let us get one thing clear, the small savings are admirable. We are not really belittling this because it will add up in time. However, if those small savings require you to exert a huge amount of effort, then it is not worth it. Take for instance couponing. If you spend a lot of time searching for coupons and arranging them, it might not be worth it if you cannot use all the coupons before they expire.
Earn instead of spending the time to look for small bargains.
As mentioned by the MoneyNing article, instead of focusing too much on spending less, why not earn more? If you usually spend 5 hours browsing the Internet to get a couple of dollars of savings, why not set up a freelancing career? You can go to websites like UpWork or Elance to find clients who can hire you on a per project basis. For instance, you can be hired to be a freelance writer. If you charge $15/hour of writing web content, you will earn $75 for 5 hours. That beats searching the web for discounts on things that you intend to buy. What do you think is the more productive way to spend your time? Obviously, it is the one wherein you get to earn money.
Tips to build your net worth
If you are serious about building your personal net worth, here are some tips that you can follow.
Lower your liabilities. Work on paying off your debts to help give your assets a boost. If you own $1 million worth of assets but you are paying off $800,000 worth of debt, you only have $200,000 as your net worth. The more debt you pay off, the higher worth you will get.
Save up for your emergency fund. This is an effective way to keep you from borrowing money unnecessarily. When you have a cash fund for unexpected expenses, you do not need to borrow money to pay for that financial need.
Invest your savings. Although you need to keep your emergency fund in cash, you should invest the other savings that you can put aside. When you invest it, you can earn money through compound interest. This is a great way to make your savings earn from you.
Contribute as much as you can in retirement. During your pre-retirement years, this is something that you should contribute on aggressively. This will not only help you increase your personal net worth, it will also secure your retirement.
Be a wise spender. According to an article published on MoneyCrashers, you can earn a high-income but if you spend every penny of it, that will not help you grow your personal net worth. This is why you need to take into consideration your spending habits. Your income is not enough basis to say that you are succeeding. You need to look at your discretionary income.
Common questions about personal net worth
Question: What does personal net worth mean?
Answer: This refers to your financial worth. It is your assets less your liabilities. If you have a home that is worth $500,000 but you still owe $400,000 on your mortgage, you can only add $100,000 in your net worth.
Question: Why is your personal net worth important?
Answer: This is important because it measures your financial wealth. It determines how much you can liquidate in the event of a very expensive emergency. It can also be a basis for you to determine if you can opt for early retirement or not.
Question: How can you track your personal net worth?
Answer: There are many ways to track your personal net worth. A simple list of your assets and liabilities will reveal your personal net worth.
Question: How will you know if you have enough personal net worth?
Answer: If you have a positive net worth, that is usually a good sign. This means your assets are bigger than your liabilities. But if your liabilities are greater than your assets, then you need to improve your financial situation.
Question: What can I do to build my personal net worth?
Answer: There are many ways to build your personal net worth. It all depends on your current financial situation. If you have a lot of debts, you need to pay them off. If you lack savings, you need to spend less and save more.