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Be A Millionaire: How To Grow Your Personal Net Worth

raining cash on businessmanIf you want to be super rich, you need to be focused on growing your personal net worth. Take note that this is not just about the amount of cash that you have. It involves your overall value. When computing your net worth, you need to consider your cash, investments, assets and other factors in your life that add to your value.

Some Americans think that their lives never really improved after the Great Recession happened. But if you look at the statistics, you will realize that there is a rise in the number of millionaires all over the world. According to the website WorldWealthReport.com, there are 14.6 million millionaires around the world as of 2014. In North America, there are 4.68 million millionaires – up by 8.3% from 2013. The most number of millionaires can be found in the Asia-Pacific region with 4.69 million of them. The number of millionaires in this regions increased by 8.5% compared to 2013. The region that comes in third when it comes to millionaires is Europe with 3.99 million millionaires, up by 4%. Even Middle East (0.61 million) and Africa (0.15 million) have more millionaires now with a growth of 7.7% and 5.2% respectively. Only Latin America have less millionaires now at 0.53 million – a 2.1% decrease.

You see, regardless of the economic conditions, some people just know how to manage their resources so it will grow and make them millionaires.

3 steps to grow your net worth

You will find a lot of tips and steps and techniques all over the Internet that will teach you how to become a millionaire. The truth is, there is no one-formula to getting rich. People like Warren Buffet, Donald Trump, Robert Kiyosaki and all the other successful individuals out there have different get-rich methods. What works for one may not necessarily work for you. This is why you need to be careful when you are looking for tips to improve your financial situation.

If you think about it, becoming rich begins and ends with financial management. You will never be a millionaire unless you know how to manage your money well. Not only that, you cannot stay a millionaire if you fail in money management as well. But apart from financial management, there are three steps that will help you grow your personal net worth.

Step 1: Get rid of too much debt.

The first step is to lower your liabilities. When it comes to financial liabilities, the first thing that comes into mind is credit. The truth is, debt is not all bad. Millionaires believe that there is such a thing as a good debt and they know how to use it to their advantage. But you need to know which debt is sucking the life out of your finances. You need to find them and end their association with your money. They will only bring your personal net worth down. High interest credit card debts are on top of the list. You can continue to use credit cards for a more convenient shopping experience but make sure that you can afford to pay it in full when the bill comes. The idea is to keep the high interest rate from touching your balance. That is how you are wasting money when you let credit card debt get out of hand.

If you lower your debt balance, you will also raise your credit score. This will open up a lot of financial opportunities for you – like a low interest rate on a loan that will help you finance investments.

Step 2: Secure your future.

There is a simple way that you can secure your future and that is to save. You need to save up for your emergency fund. You need to start contributing towards your retirement fund. You also have to think about the college fund of your kids so you can help them stay out of student loans. The last fund can also be for your own education so you can qualify for a higher compensation at work. All of these funds should be considered if you want to grow your personal net worth. Those who start contributing to their retirement fund while in their 20s will most likely be a millionaire by the time they retire. That is the beauty of compound interest.

When it comes to your emergency fund, this will secure your future – especially against debt. If you borrow money because of an unexpected event, that cannot be considered a good debt. In most cases, debts borne out of emergencies are done out of desperation and that usually means you are on the losing end. Good debts are those that are well planned. To make sure that you will never go into any unplanned debt, just build up your emergency fund.

Step3: Invest your money.

The most proactive way to grow your personal net worth is by investing your money. Putting your money in a savings account is not really considered an investment because of its pitiful interest rate. You need to literally invest your money in stocks, bond and mutual funds to help make it grow as the economy of the country continues to recover. According to an article published on CapGemini.com, High Net Worth Individuals invest their money in different ways. The survey known as Global High Net Worth Survey , revealed that the net worth of HNW individuals are divided into 5 categories: Equity (27%), Cash (26%), Real Estate (20%), Fixed Income (16%) and Alternative Investments (10%). As you can see, most of their wealth is kept in equities. This is because it has the best chance of growing there.

Learn about investing because this is a great way for you to increase your personal net worth. There are both low-risk and high-risk investments that you can dabble in. The rule is, the higher the risk, the higher the potential for growth is.

The millionaire mindset will help improve your wealth

Take note that completing the three steps discussed above does not guarantee that you will become a millionaire. It will help improve your personal net worth but whether or not it will make you a millionaire is still uncertain. That will depend on how you will manage your money after you have invested it. You still need to practice the right financial management skills and at the same time, apply the millionaire mindset.

In the website RichHabits.net, Thomas C. Corley revealed the 5 habits that help make people rich. The author spent 5 years studying 233 millionaires to determine the reasons why they are currently successful. Mind you, these are not millionaires who were born rich. These are self-made millionaires. They worked hard to be where they are and if you want to be like them, you need to implement the following habits.

  • Create multiple sources of income. The first habit is to diversify your streams of income. Do not depend on just one because if something happens to that source, you will be left with nothing. According to the studies done by Mr. Corley, 65% of these self-made millionaires have three or more sources of income. These include rental incomes, stock market investments, side businesses, royalties, etc.
  • Dream before you set a goal. Before you define your goals, make sure you identify your dream first. Your dream will point you to the general direction that you want your life to take. Once you know where you want to go, you can set the smaller goals that will take you there. You can begin by writing down where you want to be in 5, 10, 15 and 20 years time. Be specific about the details like where you want to live, how much your personal net worth should be, etc. When you have these written down, it should be easier to identify what you need to do in order to reach them. Setting your goals around these dreams will make it easier to take action because you have your motivation through your dream.
  • Avoid wasting your time. The article also revealed that millionaires try not to waste their time. There is great value in time and once you waste it, you cannot bring it back. So make sure that every moment spent in your life will count.
  • Find a mentor. Go and find someone that you want to emulate and learn from them. Most of the millionaires in the world attributed their improved personal net worth to their mentors. It could be your parents, a friend, a boss, or a teacher. Find someone that you respect and you know will have a positive influence in your life.
  • Do not quit on a dream. The last habit pointed out by Mr. Corley is to never quit on a dream. An admirable trait of self made millionaires is they are very persistent. When you find an obstacle blocking your way, you either go through it or you go around it. You never stop just because things get a bit too hard. If you fall, you stand up to try again. That persistence will help you grow your personal net worth until you become a self-made millionaire yourself.

Here is a video with 17 tips that will help you get a millionaire mindset. These were created by T. Harv Eker.

What Motivates You To Grow Your Household Wealth?

smiling womanWe’ve all been driven to grow our household wealth. It seems like from the beginning of our existence, we were raised to prepare for this task. We are sent to school to increase our skills so we can earn enough cash to grow our personal wealth. We buy our own home to increase our net worth. We all work 9-5 every day for 5-6 days a week just so we can earn the money that will help us spend for all our needs.

Modern society is built in such a way that we cannot survive without money. It’s a cliche that finances are given so much importance in our lives but even the most un-materialistic person will have to agree that you cannot live without money. We have corrupted too much of our natural resources that most of us cannot be sustained by what mother nature can provide. It all has to be improved and commercialized to fit all of our needs and that requires money.

The US household wealth in 2013

Thankfully, the US household wealth is continually improving to meet all our purchasing demands. In the most latest release of the Federal Reserve.gov, the total wealth of all the households and nonprofit organizations have steadily increased for the past 7 quarters. The release last December 9, 2013 showed the following:

  • Q1, 2012: $80.85 trillion, net worth of $67.32 trillion

  • Q2, 2012: $80.92 trillion, net worth of $67.38 trillion

  • Q3, 2012: $83.08 trillion, net worth of $69.60 trillion

  • Q4, 2012: $84.52 trillion, net worth of $70.92 trillion

  • Q1, 2013: $87.51 trillion, net worth of $73.97 trillion

  • Q2, 2013: $88.90 trillion, net worth of $75.33 trillion

  • Q3, 2013: $90.93 trillion, net worth of $77.25 trillion

There hasn’t been a decline since 2008 and this shows that we are making good progress. Although the consumer credit is also increasing, we have learned how to control it enough to keep it from ruining our household wealth.

But even as the improvements are there, the quest to increase one’s net worth is still evident. We still go to work, aspire for a higher paying job and so much more. But what exactly drives us to grow our household wealth?

Growing your personal net worth is the same as just about everyone else. However, we are all driven by different motivators. Before we discuss them, let us understand why this is important.

The most important source of our wealth is our job or business. This is something that we do everyday. If you really want to grow your household wealth, you need to make sure that you are productive enough to earn as much profit as your limited time can produce. This means you need to choose the right job that will give you the satisfaction that you need.

StatisticBrain.com shows that although money is an important factor, people value the feeling of accomplishment more than a higher income. In fact, based on the study from the University of California Berkeley last April 2012, 48.8% prioritize the sense of accomplishment. Only 21.3% look at a high income as the priority.

5 ways you are motivated to increase your personal net worth

Identifying what will motivate you the most to earn money will help encourage you to overcome any obstacle that will come your way. Work is not easy and motivation will help you plow through all the difficulties.

Given that thought, let us define the 5 different money motivators that can increase your chances of growing your household wealth.

  • Need to survive. The most important yet surprisingly not the most common is the need to survive. As we explained earlier, you need to have the money to meet your daily needs. That is just how society is built. We used to trade products but since not everyone has access to natural resources, we are given a symbolic trading tool that we now call money. If you want to eat, you need money – even if it is to provide the materials you need to cook. If you want to clothe yourself, you need to purchase that and that requires cash.

  • Need to improve your status symbol. The most popular motivator that is oftentimes unnecessary is to improve your status. We strive to increase our household wealth because we want to be at par with the beautiful homes of our neighbors. We want to be able to turn heads when we drive past pedestrians in our luxury cars. We want to be able to send our kids to good schools. This is caused by the consumerist mentality that we grew up in and although it is not as important as the need to survive, it is still a strong motivator for most of us.

  • Need to improve our quality of life. This is almost similar to the previous but it is more focus on what you perceive you and your family wants. Improving your status is something that depends on the people outside of your home. The difference is, the need to improve the quality of your life depends on what will make the people inside you home happy. For instance, you want to earn more to help your family afford a bigger house because the kids are getting bigger or there is another one on the way. It is not because everyone in the neighborhood are expanding their homes.

  • Need to be financially stable. Another motivator that people have to earn more money is to be financially stable. THis is probably the wisest of all the money motivators. If you had been through a bad crisis in the past, you want to make sure that you set up your future right to be financially stable. Some people simply want to have less monetary stress so they can enjoy their lives. This can only be done by improving your savings and making sure that you have the money stashed away before a crisis strikes.

  • Need to have fun. This is probably the most aspired yet unrealistic for a lot of us. It is a rare feat for anyone to have a career or financial decision that is motivated by fun. Most of the time, it is motivated by practical reasons. But some people have the personality that can only be motivated by their need to have fun. This feels more uplifting than the others but it may not always be the most rewarding.

Identifying your motivation to grow your household wealth will help you understand the instinct decisions that you make. With this comprehension, you are able to set up your financial opportunities to suit your personality best. The reason why you want to boost your motivation is because your happiness and sense of fulfillment will push you to go through boundaries you never thought of surpassing.

It may or may not be a good thing but society wants us to keep on improving our household wealth – even beyond what we really need. It may be excessive but you can actually use that to set up your life right. It is always okay to build up your wealth but make sure that you do it for the right reasons. Otherwise, you might end up pushing yourself towards a path that you cannot live up to. That can end up failing.

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