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by Tamila McDonald
March 15, 2018
by Tamila McDonald
March 15, 2018
Many people view their net worth as a sign of financial success. That leads them to explore options for increasing their net worth as quickly as possible.
While improving your net worth overnight might not be possible, you can make significant strides in a reasonably short time. If you want to get started, here are three ways to quickly improve your net worth – and you can start today.
Your retirement account serves as an asset. This means it increases your net worth. Since planning for retirement should be a priority, fully funding your account also provides you with financial security.
Ultimately, you want to either fund an IRA up to the annual limit or contribute enough to an employer-sponsored plan, like a 401(k), to receive the full match. And, remember, matching funds from your employer is like free money, so get every dime you can to improve your net worth.
As a bonus, contributions made to a Traditional IRA or most employer-sponsored plans are tax deductible. This lowers your tax liability, allowing you to pay less each year you contribute. If you experience suitable savings, you can then redirect those funds to other goals, including improving your net worth.
One of the fastest ways to improve your net worth is to pay down your high-interest debt. Why? Because the accumulating interest keeps your balances up, increasing your liabilities.
If you have an emergency fund and are funding a retirement account, throw your extra money at your highest interest debt. Then, once you have that paid off, move to the new highest interest debt, proceeding until they are all paid off.
You can also explore options like debt consolidations to help you pay off your debts faster. Typically, you'll need a good credit score, and you'll only want to proceed if the rate is lower than your current ones.
Over time, this will free up the cash that was going to debt payments. Then, you can save or invest more as a means of increasing your net worth.
Both your emergency fund and any other traditional savings need to be in a high-interest savings account. Typically, you aren't going to move this money around often, so explore a variety of options to find the best rate.
Often, you'll find better rates at credit unions or online-only banks, so start your research there. While the rates aren't as high as they once were, any increase allows you to earn more from the money you have stashed away. So, if your current interest rate is nonexistent, and you find an account offering 1 percent, consider making a switch. Just make sure to check for any hidden fees as these can negate any gains you receive on the interest end.
Since you don't need to access these funds regularly, don't be afraid to choose an institution that isn't local. As long as you can transfer the money into an accessible account within a few days, it will normally be sufficient for emergencies.
Usually, unless you experience a sudden financial windfall, it takes time for your net worth to improve. However, but following the tips above, you can make significant progress faster than you are today.