Worried about Your Net Worth? How to Increase It

Your net worth acts like a wakeup call or a confirmation that your financial health is on track. What is net worth? Net worth is the total assets that you own including retirement funds, investments and personal properties among others minus the liabilities such as mortgages, loans, and medical bills among others. This difference is your net worth. 

How can you Increase Your Net Worth

When you have ambitions, calculating your net worth from time to time helps you to determine how far you are and to come up with new ways to improve the situation. With a few strategies, you can increase your net worth. 

  • Pay Your Debts

Debts are liabilities that reduce your net worth. When debts are more than your assets, your net worth will be negative. This is the reason for paying your debts boosts your financial situation. Find a plan to increase repayment which shortens the payment period and reduces interest. When you borrow money, put it into an investment that you will not struggle with repayments.

  • Increase Your Income

When you have more streams of income and you spend wisely, it means that you will be able to invest more. Your assets such as bank and brokerage accounts, real estate investments and retirement funds will increase. Even with little investment, you will be boosting your net worth. 

  • Don’t Waste Your Money 

Separating your needs from wants help in spending money wisely. It means that you only buy what you need and not what you want. One big problem with people is that they can’t help impulse buying. They buy something just because they like it and they can afford it. Sometimes they don’t even use what they bought. Spend money wisely to increase your net worth. 

  • Continue Investing

Although the liquid money you have saved contributes to your net worth, its better where the money is working for you. You should invest more money than you are saving. This is because, when you invest, your net worth tends to grow more. The market has plenty of options for investments such as mutual funds, real estate, stocks, and retirement funds among others. Diversify your investments and it will be easy to boost your net worth.

Knowing your net worth helps in guiding you on where to put more money and where you stand financially. Financial health gives you peace of mind and by investing more, paying your debts and increase your income streams helps in boosting your net worth.

Financial Tips for First-Time Home Buyers

Buying your first home can be an exciting experience and at the same time, overwhelming. You might have done an extensive research on the do’s and don’ts, but still get saddled with the reality on the ground.

But before making a buying decision, ask yourself these questions;

  • Am I ready to buy a house?
  • Is buying a house the best option?
  • How much do I need to buy a home?
  • Should l pay cash or get a loan?
  • Do I have enough money to make a down payment?
  • How much house can I afford?
  • How is my credit score?

Are you ready to take the plunge?

Buying a home is not something you decide overnight. It’s a huge investment, so you need to evaluate if you are financially and emotionally ready to buy a home.

Is it the best option for me?

Buying a home isn’t always better than renting. You should weigh your options first. And also remember, money isn’t the only factor that is put into consideration. Things like location, lifestyle, marital status, convenience, flexibility should also be taken into account.

How much do I need to buy a home?

The price of the house isn’t the only amount involved in the buying process. Other costs include;

  • Down payment.
  • Contingencies like Inspection and appraisal.
  • Closing costs such as title charges, settlement fees, lender fees.
  • Prepaid expenses.

Cash or loan?

Both options have pros and cons. If you decide to pay cash you won’t be tied down with monthly repayment and have a peace of mind knowing you are the owner of the house. But on the other hand, you’ll; miss an opportunity to improve your credit score, sacrifice liquidity and tie all your money in one asset.

#Tip:  To get the best mortgage rate, compare rates from multiple lenders.

How much do you have for a down payment?

If you cannot afford to pay cash, how much have you saved for the down payment of the house? Generally, the mortgage standard is a 20% down payment. If for one reason or another you can’t come up with that kind of cash, you can still buy a house with a conventional mortgage loan. But for you to qualify, you must have a steady income, a fair credit score and a realistic debt-to-income ratio.

But always remember your credit score plays a vital role on how much loan you can qualify for.

How much can you afford?

Before you start house hunting, figure out which house you can comfortably afford. This is perhaps the most important thing you should think about before making any hasty decisions. It’s also best to get pre-approved by your mortgage lender before going shopping.