Nudge Your Net Worth
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Do you know your net worth? Can you make an educated guess?
Your net worth is a valuable piece of information that helps keep you in touch with your overall financial health. By keeping aware of your net worth you’re also keeping aware of all your financial accounts, their value, and their liquidity. Knowing your net worth can also help you make sound investment decisions.
Knowing your net worth can help you answer questions like the following:
•Are you drowning in debt? High interest or low interest? Good debt or bad debt?
•Are you house rich and cash poor?
•Are you over saving for your kids’ education and under-saving for your retirement?
•Are you over-investing in tax-deferred retirement accounts and under-investing for early retirement?
I update my net worth every single month. I challenge myself to see that number tick up and up and up. There are many ways to measure wealth, but I find that having an actual number to work with makes measuring easy—plus it’s fun!
I think it’s so much fun that I wanted to write this post. Below is advice for increasing your net worth—if only a little. Every little bit counts!
Figuring out your net worth is easy. It may be a bit depressing, but it’s very easy. Just subtract your total liabilities from your total assets. It may take some time if you have lots of accounts, but you can handle it. Go now, put your grown-adult cap on, and figure out your net worth.
You can use NetworthShare.com to help you figure out your net worth and they’ll send you an email reminding you to update every month. You can choose whether or not make your profile public, but I encourage you to make it public. Making your profile public will motivate you to make wise financial decisions. If you’re curious, there are lots of public profiles for you to check out including mine. Just so you know, that’s my household’s total net worth, not my personal net worth.
Done? Good. Now let’s work on increasing that number.
First, The Obvious — Get rid any high-interest debt you have. Get rid of it NOW. This is not negotiable. Unless you have a terminal illness, you have no excuse to possess high-interest debt. Pay it off if you can, transfer it if you have to. Get a zero-percent interest credit card, take a second mortgage, or swallow your pride and hit up your parents for a loan. Get a job, get two jobs, get four, sell your crap, sell your body—whatever you have to do, just do it.
If nothing else, call your credit card company and ask nicely for a lower interest rate. If they say no, demand it. If they still say no, then write a letter. Keep writing letters every single month until you get a lower interest rate.
Next Up — Do you have an emergency savings account? Open one, go now and add $25 to it. There, you’ve just added $25 to your net worth. Yippee!
Don’t have an extra $25 to spare? Challenge yourself to find/make it by the end of the week. $25 is not a lot of money. You can do an odd job, babysit, sell your blood plasma, cash in that pile of aluminum cans collecting in the shed or those pennies sitting in that dusty jar. I’m sure can find $25 if you try. You can do it!
Looking for an easy way to earn $25? Click my Capital One 360 my referral link, and open up a new checking account. If you qualify*, Capital One will deposit $25 into your new account. Don’t you just love free money?
*In order to qualify, you must be a new customer, open the account with a $250 deposit, and make at least 3 purchases. The big negative is that you don’t get the money for 50 days, but still—it’s free!
I’ve read how some personal finance bloggers like to make their rounds, going from bank to bank collecting referral bonuses from each one. If you have the patience, I guess it’s not a bad way to earn some extra cash.
I’ve had my checking and savings accounts with Capital One 360 for years. I love them because not only do they pay a fair interest rate without minimums, but they also allow up to 25 sub-savings accounts. You can use the sub-savings accounts to earmark your savings for specific goals. I have one for emergencies, one for automotive expenses, one for future investments, and one specifically for a new computer. That last one has had $10 in it for the last two years. *Cries*
Now — Have a look at your retirement savings. Are you taking advantage of you employers match incentive? Most employers offer to match you contributions to you retirement account up to a certain percent or dollar amount. At the very least, you should be contributing enough to to take full advantage of your employer’s retirement match.
IT’S FREE MONEY!!
Whether or not you’re getting the company match, have a look and see if you can afford to increase the amount you save. Even as little as a 1% increase in savings can make a huge difference. Saving in a tax-deferred retirement account is a great way to add to your net worth because you can’t touch that money until you retire. Once it’s in there, it stays as a part of your bottom line. We currently save 10% of our income for retirement. We haven’t been able to increase that number for a few years, but we’re working on it.
Finally — Have you already saved enough for emergencies? Is your retirement savings at its limit? Good, because now we get to the fun stuff—your freedom fund.
Have you heard that term—freedom fund? Your freedom fund is savings/investment account where you save money to pay for all your hopes and dreams. It’s the place where you save for your early retirement, your own business, your backpacking trip around the world, your Bugatti, etc.
Now, if you were a perfectly responsible adult, you would “pay yourself first” and save at least 10% of your income in your freedom fund; but let’s be honest, life happens and I really, really like Subway sandwiches. After meeting all my other expenses and savings goals, I can’t afford to save an additional 10% of my income and maintain a daily smile. Smiles are expensive. Subway sandwiches make me smile. Jägermeister makes my husband smile.
What makes you smile?
I’ll bet the thought of saving an additional 10% of your income does not make you smile. You’d much rather have that income for your enjoyment today, right? That’s where tiny challenges come in. You know those savings challenges pins all over Pinterest? I love those things. Whenever I’m in the mood, I’ll pick one and see how long I can follow through. It’s even better if you can compete with a friend. The one I’m working with right now is to try and save $1000 in 52 weeks. It’s getting tough and I’m going to abandon it soon, but it was fun while it lasted.
In honor of this post, I’ve created my own! It’s a little different than the others, I hope you like it. Thank you for reading and if nothing else I hope this post gives you something to think about.
Click the link if you just want the text.
12 Month Money Saving Challenge