5 Simple Ways to Increase Your Net Worth

If Your Net Worth Isn't What You Hoped, Make a Few Simple Changes Starting Today

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When it comes to your finances, there are a lot of different numbers that you may be focused on.

For example, you may be preoccupied with the numbers in your checking account, savings account, various retirement accounts, and investing and trading accounts. Or you may be focused on how much you owe toward credit cards, student loans, or a mortgage. Of course, tracking your income as your career progresses may also be a priority.

All of these numbers are critically important for understanding your overall financial health. But there’s one number in particular that can determine just how successful you are with building your assets for the future: your net worth.

What Is Net Worth?

Net worth is simply the difference between the value of what you own—your house, retirement funds, investment accounts, checking account balance, etc.—minus such liabilities as the mortgage, credit card debt, and so forth. Net worth is an important number to keep in mind as it can help you determine just how much your debt can affect your future wealth, as well as highlight the areas you should focus on before retirement.

Calculating your net worth is as simple as its definition. Take a look at everything you own, including assets that will be part of your retirement plan, such as your 401(k), stocks, and other investments. Make a separate list of outstanding balances you owe, including debt, and subtract that amount from the sum of everything you own, and what’s left is your net worth

Sit down, and take a few minutes to calculate the number. Are you pleasantly surprised by the number, or did you expect your net worth to be higher? If so, don’t fear! There are a few things that you can do to increase your net worth, starting today.  

1. Review Your Liabilities

Take a detailed look at your liabilities. This should be an easy number to figure out as it’s simply how much debt you owe each month and in what form, such as your mortgage, credit card debt, and loan payment. Are there liabilities that you can eliminate or reduce? Reducing your debt is a big step in helping your net worth number increase.

For example, consider refinancing high-interest loans or credit cards to speed up the debt-payoff process. Refinancing to a lower rate means that more of your payment goes towards the principal you owe each month, allowing you to chip away at your liabilities faster. In the case of credit cards, you can refinance using a 0% balance transfer. Just be sure to be clear on when the promotional rate ends so you can avoid triggering interest charges.


If you're transferring a balance to a credit card with a 0% APR, don't forget to add in the balance transfer fee. Credit card companies can charge you a percentage of the balance being transferred for shifting debt to a new card.

Alternately, consider changing things up with your payment plan. Rather than making one payment toward your debt each month, consider making weekly or biweekly payments instead. That can help to reduce the principal sooner, in turn reducing the total amount of interest you'd pay.

You may also consider using a home equity loan or line of credit to consolidate high-interest debt. While this could potentially yield a low-interest rate and simplify your monthly payments, remember that your home is what's used to secure the loan. If you default, you could risk losing what may be your biggest asset if the bank initiates foreclosure proceedings against you.

2. Review Your Assets 

You may not know exactly how much all your assets are worth, or how that value is going to change, but you can get an estimated figure. Try not to leave any assets out. Here are your main asset classes: 

  • Primary residence: "Equity" simply means what your home is worth, less what you owe on the mortgage. The more equity you have in your home, the greater your net worth has the potential to be.
  • Vacation home and rental property: These assets are usually paid for with cash, so you'll want to count them. The same rule for equity applies to investment properties.
  • Investments: These include stocks, bonds, mutual funds, and tax-deferred retirement plans. Just remember to add the taxes on these assets to your liabilities.
  • Collectibles: Art, fine wines, jewelry, classic cars, antiques—the market for these items will fluctuate, but you can always have an appraiser come help you determine their value.

You can also include every day assets, such as the balances in your checking or savings account, in the number. When adding up assets, every penny counts toward your net worth.

3. Trim Expenses

The less money you spend, the more you can accumulate in net worth. If you haven't done a budget review lately, look at your current expenses and see whether there are areas where you can cut back, including bigger things like getting rid of one of your vehicles if you have multiple car payments, or smaller things, such as skipping lunches out or canceling subscriptions for magazines you don't read.

Remember, even a few dollars here and there can add up to a lot of money throughout the course of a year and longer. Consider the costs you have annually that you could downsize.

What annual costs are bringing your net worth number down—and which ones don’t you need? Take a look at things like your insurance and healthcare premiums each year. Compare interest rates, and see whether any of those annual costs can be trimmed or eliminated altogether. Then, commit to saving and/or investing the difference to add to your net worth.


Contact your insurance company about potentially bundling your various policies together. Doing so could help you qualify for a discount.

4. Pay Off Your Mortgage

Consider paying off your mortgage, and get your biggest debt off your books. Making biweekly payments is a good way to accelerate your mortgage payoff. Just remember to consult your lender to determine whether a prepayment penalty will apply. The penalty, if any, can be steep, depending on how much of your mortgage balance is paid off ahead of schedule.

5. Invest for Income

Income investing is a great way to increase your net worth if done right. One strategy you can use is the bucket system. The main premise of this approach is that you’ll divide your liquid investments into three buckets: the cash bucket, the income bucket, and the growth bucket.

By funding different buckets, you give yourself different assets you can draw on to fund your lifestyle before and during retirement. That can help to supplement other retirement income sources, such as a pension or annuity or social security benefits.

The Bottom Line

Increasing your net worth isn't about doing one thing or another; it's about using a strategy that's designed to address all of the areas of your financial plan. By making the various moving parts of your plan work together, you can put yourself firmly on the path to a higher net worth.

Frequently Asked Questions (FAQs)

What is a liquid net worth?

Your liquid net worth only counts assets that can be quickly turned into cash. Stocks held in a brokerage account, for example, can easily be sold, and the cash withdrawn. The value of your home, on the other hand, is much harder to tap. You can't sell your home as quickly as you can sell a stock. Stocks held in retirement accounts will also be excluded from your liquid net worth, because the funds can't be withdrawn without incurring a penalty.

What is considered a high-net-worth individual?

Someone with at least $1 million in liquid assets is usually considered to have a high net worth. There isn't a set definition for this term, even as it's commonly used by financial institutions. High-net-worth individuals may receive special benefits or exclusive services from institutions that want to compete for large accounts.

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