There are two ways to increase your net worth: increase the assets or decrease the liabilities. The characters have already discussed the primary techniques to accomplish this goal.
Increase Your Assets
- Take advantage of your employer’s retirement plan matching, plus contribute as much as you can above the match amount.
- Establish an emergency fund of between three and six months of income in a savings or money market account. Rates for these types of accounts are typically low because the money is easily accessible. Find the highest rate you can.
- Target the areas on the Balance Sheet which have the potential to appreciate in value over time and/or generate income, such as investments, income-producing real estate, retirement accounts, and cash/savings.
Decrease Your Liabilities
- Reduce your liabilities by paying off credit cards and car loans.
- Limit spending in areas such as furniture, cars, and personal property, which tend to be purchased through the use of financing. In addition to minimizing your liabilities, the less spent on property which generally depreciates in value, the more money you’ll have to invest in property which may have the potential to increase in value