How to build your net worth in 2023
There are so many ways to build your net worth.
As all good accountants will tell you, the way you do it will totally depend on your current financial situation and the goals you have. However, we can try and lump the possibilities together into basic categories.
If you are trying to build your net worth this year, here are a few things you might want to consider.
1. Pay off debt
The most obvious starting point is tackling any debts. Debt costs far more in interest than the average saver can usually make so focus on paying off your debt. Focus on the the most expensive debt (the high interest stuff), such as credit card debt. If you have multiple credit cards, you can tackle it in two ways, clear the highest rates first (makes the most sense) or if you get bored quickly and need quicker wins, go for the smallest balances first so you can cross them off that list.
2. Build an emergency fund
Life happens and you have to expect the unexpected. Having an emergency fund can help protect your net worth by providing a financial cushion in case of unexpected expenses. You ideally want between 3-6 months worth of expenses put to one side. Sometimes, I advise people to put this as their number one step. If money is stressing you out and you are on edge all of the time, do this before you clear your debt. No, it is not the wisest financial move, but your mental health matters too.
3. Save and invest
Building your net worth will require saving and investing for the long term. Consider setting financial goals and creating a budget to help you save and invest effectively. This is savings beyond your emergency fund. It will likely be money that you put into an ISA and invest over the longer term. You can choose the funds depending on what’s going on in the economy and based on the past data of how those funds have performed. Don’t go wild, if you have no clue, speak to an expert. I can hook you up with one.
4. Increase your income
Increasing your income, whether through a raise or a side hustle, can help you build your net worth faster. If you already have your own business, what income streams do you currently have? How could you expand this? If you mainly do 1:1 work, what could you offer that is DIY for your clients? If it’s mostly DIY through courses, could you offer VIP days, a mastermind etc? List out all the possible additional income streams you can think of and then get started on creating them. If you want some accountability and support, come share your plans in my free facebook community.
5. Review, reduce or remove expenses
Be brutal if finances are worrying you. It's not fun but you need sit down and be clear on exactly where your money is going. Often we "think" we know and when we go through the last 6 months of expenses find we didn't have a clue. Calling up suppliers for better deals and shopping around can help you to reduce expenses. And if you’re paying for Sky, Disney and Netflix…how much time do you really have to watch them all? Make your lunch at home, make a coffee in your kitchen (like in the olden days) rather than doing the Starbucks drive thru! Remove some expenses. Every little helps. Set a budget and stick to it. Your future self will thank you, even if right now it doesn't feel like it.
Remember that building net worth takes time and discipline. It's important to be patient and consistent in your efforts, but down the line, your future self will be so glad to the you that did this work.
6. Join Money Magic
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