How To Grow Your Wealth and Net Worth

How to grow your wealth through a practical understanding of net worth - so you can secure your financial future by understanding the big picture.

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Is your family wealthy? Or do you, like many others, fall for the lazy way of thinking about what being wealthy or rich actually means?

The way a lot of people view wealth is material and monetary accumulation. Or, the one who has most stuff (and money) when they die, wins. Owning stuff does not mean you’re wealthy and it might actually mean the opposite. It all depends on how you paid for the things.

I grew up learning the basic duality of wealth, which meant rich = good, poor = bad.

Simple enough.

Why would we need to complicate it more than that? Well, because it’s so dang fun! So let’s jump in, feet first and let’s talk about the term net worth. Are you confused by it?

The Concept of Net Worth

The financial world is full of weird words and ideas that you most likely won’t encounter anywhere else. Unless you have very geeky friends, like me. One such idea or such concept is net worth.

To be able to look at the topic of riches for any family or individual we need to learn what net worth means. The simple explanation is that net worth is everything you own minus everything you owe. Simple enough, right?

If it is that simple, can’t I stop writing here then?

Well, sure. But I figure I’ll explain a bit more and you read on if you feel like the explanation above seems too simple, fair?

Related: Average Net Worth By Age: Where Do You Stack Up?

What Do You Own?

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It’s easy to trick yourself into thinking that you own a lot of stuff. It could be a house, a car, the furniture in the house, the clothes on your back, and so on.

Some of the things mentioned you probably do own. But to get a bit deeper into what net worth is, we need to add a few more of those financial terms.

Assets and Liabilities

We need to talk about assets and liabilities, which are the key elements in the calculation of net worth. Ok, I can see the fear in your eyes – “He said calculations!”.

Yes, I’m sorry, but this will need some math. But I assure you, it’s very basic and I will hold your hand all the way.

An asset is something you own that you can sell for money so that you instead get cold, hard cash.

A liability is the opposite of an asset. It’s something you owe. A debt of some kind, in other words.

So let’s go back to the things you might own, and let’s make a silly example. See that cool leather jacket you bought the other day. You own that, right? Or, wait, you paid for that with a credit card, with money you technically didn’t have.

In this silly example, the liability (what you owe the credit card company) is the entire value of the jacket. That makes this jacket a liability and not an asset. So, in a way, you don’t actually own it until you pay the bill to the credit card company.

How Does This Relate to Personal Net Worth?

A more commonly used example to explain this could be with a home that has a mortgage on it. Let’s assume you bought a condo for $100,000. You made a down payment of $25,000 and you got a mortgage for the remaining $75,000.

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What you actually own in your home here would be $100,000 – $75,000 = $25,000. Until you start paying off the mortgage, you only own the initial down payment you made on the condo.

If this would be the only thing you own in life, your net worth would be $25,000 – $75,000 = -$50,000.

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Ouch, not good, right?

Now, let’s step into our time machine and swosh forward 15 years. In this time, you’ve kept paying the mortgage on the condo and it’s down to $10,000. The value of the property also increased by 25%, so it’s worth $125,000 today.

Kaapow! One time travel later and your net worth with this condo alone would be $125,000 – $10,000 = $115,000.

Of course, most real people don’t travel in time and end up being one-asset-wonders. A real person might have a car with a car loan and a mortgage. You might have some money in index funds, and an emergency fund in a good old savings account. Most people have some assets and some liabilities.

How to Grow Your Wealth?

For me, I focus on growing wealth by investing in stocks, mutual funds, and other securities. When it comes to investing, there are a lot of options available to you. Each option has its own set of benefits and drawbacks, so it's important to do your research before making any decisions.

Here are some ways you can increase your wealth by increasing your income, saving more money, and investing.

1. Increase Your Income

There are a number of ways to go about increasing your income. One option is to get a better-paying job or simply ask for a raise.

Another option is to make more money through investments or other sources of additional income.

I usually advise going through this route by finding ways to make extra money through side hustles.

There are many ideas on ways to increase your income:

Finally, you can also reduce your expenses in order to have more money available to save or invest.

2. Save More

There are a few smart ways to save money easily. You don't have to make big changes or go to extremes to save money. Just making a few small tweaks can help you save a lot of money over time.

One easy way to save money is to simply use bill negotiation tools to get a lower monthly rate on your bills. This could be for your cell phone bill, your cable or internet bill, or even your insurance premiums. I use Rocket Money to do this and it's helped me save over $200 each month on my bills.

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Another great way to use cash back apps to get money back on everyday purchases. I use rebate apps like Ibotta and Upside to get cash back on groceries, gas, and even online shopping. This is a great way to save money without having to think about it too much.

Finally, one of the best ways to save money is to invest in yourself. Investing in your education, your health, and your future will pay off in the long run. I've personally found that investing in my own education has been one of the best ways to save money. By taking online courses, reading books, and listening to podcasts, I've been able to save thousands of dollars on tuition and other associated costs.

Next, you can find ways to save more money each month:

3. Invest

Once you have money that you're saving each month, you'll want to start investing it in the stock market.

When you're ready to start investing in the stock market, there are a few things you should keep in mind. First, you'll want to choose a brokerage firm. A brokerage firm is a company that will help you buy and sell stocks. There are many different brokerage firms out there, so it's important to do some research to find one that's right for you.

Second, you'll need to open a brokerage account. This is an account that is set up with a broker in order to buy and sell stocks. Once you have an account set up, you'll be able to start buying and selling stocks.

Third, you'll want to learn about the different types of stocks. There are mutual funds, exchange-traded funds, and stocks. Each one is different, and it's important to understand the difference before you start investing.

Fourth, you'll want to develop an investment strategy. This will help you figure out how much money you want to invest in each stock, and how often you'll buy and sell stocks.

Finally, you'll want to monitor your investments. This means keeping an eye on the stock market and how your stocks are performing. You'll also want to rebalance your portfolio periodically to make sure that you're still on track with your investment goals.

Investing in the stock market can be a great way to grow your money. However, it's important to keep in mind that there is risk involved. Before you start investing, make sure that you understand the risks and are comfortable with them.

Lastly, you'll want to take those savings and invest:

Final Take

Your personal net worth is the best way to actually know if you’re rich. Or rather, it’s the best way to know your actual wealth. A negative net worth is as I said earlier, ouch, as in bad. It means you owe more than you own.

Do you remember the line from the movie Fight Club?

“The things you own, end up owning you.”

If you have a negative net worth, I guess that’s true. Or, wait, no it’s not. The minimalist in me loves that line, though, I suppose.

Related to net worth, the line would be The things you own, are actually owned by someone else. So, never mind.

Even if your net worth is negative, it’s good to know. Net worth is one of the best ways to track how your wealth develops and improving your net worth is how to grow your wealth.

In our family, we track our personal net worth with a simple spreadsheet that we update every now and then, but most people use free net worth trackers like Empower.


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Whatever you use, tracking your net worth is possible and free.

But what we have come to realize is that a few years ago we fell for the myth that owning a house is one of the best investments you can make.

It’s not.

Especially not if you have to fix the house.

Looking back, we should have invested money in the stock market and held off on buying a house. It would have been better for our net worth as well. Especially if you add compound interest. But that’s a story for another day, my friend.

Related: Should I Save for Retirement or House Down Payment?

I have to admit, there are no grand numbers in our spreadsheet. We're still fixing our house without taking out a second mortgage. So less money added to our net worth. But the numbers in the sheet are positive and increasing, little by little.

Net worth can help you track your path to becoming wealthy and financially independent. Which is also nice to have a visual overview of. We’re on that path. And have a special spreadsheet for that.

How about you, do you track your net worth? Do you also use a lovely spreadsheet? I love spreadsheets. <3

About the author'
Anders Ferrer
Anders runs his own blog about family finances over at Master Your Family Money that covers most things related to, well, family finances. If you’re as excited as him about family finances, get on his email list and get a free checklist on how to manage your family’s finances.