Are you tired of living paycheck to paycheck? Does financial freedom seem only but a dream?
Making a living and managing your finances can seem like a never-ending marathon for most. However, there are ways to manage your money wisely, and it starts with your net worth.
Jason Kulpa, Net Worth expert, has built multiple businesses, including UE.co. Kulpa agrees that the very first step to take when starting to build your net worth is to find out how much yours is worth at present. Determining your net worth is merely adding up all of your assets, adding up all of your liabilities, and then taking those two numbers and subtracting them from one another like so:
Total Assets – Total Liabilities = Net Worth
Once you have found your net worth, start building your wealth with these five steps:
Step #1: Take A Moment To Review
There are four things you should consider before creating a financial plan: assets, liabilities, income, and expenses.
During the process of calculating your net worth, you collected and listed out your assets and liabilities. The overall goal is for your net worth to be positive, so that means your assets should outnumber your debts. Regardless of where your net worth falls, it is smart to see what liabilities you can set as a goal to cut.
The key to a successful net worth comes not in how much money you can spend, but rather in how much you can keep. That is why you also need to review your income and expenses. If your costs are almost equivalent to your salary, it is time to make some changes to your spending habits.
Step #2. Build A Plan
After reviewing all the necessary information, it is time to create a plan. Your budget plan will revolve around the primary two-part purpose of reducing your liabilities and increasing your assets.
Set small financial goals, to begin with, and know that it will take discipline and time to reach your desired net worth. You can determine what goals to set based on the weak points in your financial equation. For example, if you need to cut back on expenses to save a portion of income, identify unneeded spending, and eliminate it, to free up funds for savings. This step might require you to take into account expensive hobbies you can drop.
Don’t forget, the way to track your progression towards your financial goals is to determine your net worth consistently. Every time your net worth increases or decreases, you will have a mile maker to show your standings.
Step #3. Pay Off Debt
You have identified your weak financial spots, created goals to strengthen them, and now it is time to take action. Do everything you can to succeed in paying off debt. Target high-interest debt first and make extra payments when possible.
Step #4. Invest
Cutting expenses and paying off your debt successfully executes the purpose of reducing your liabilities. Increasing your assets means looking past your current income and looking for ways to make your money work for you, such as through investing. Experts say that using 10 to 15 percent of your income towards investment opportunities is the ideal amount to produce more money.
Step #5. Speak With A Professional
It is never a bad idea to speak with an expert about your financial situation and needs. Most people overlook this step since consultations cost money. Think twice before skipping professional advice. You can learn about benefiting tax breaks, better budget strategies, or smarter investment options.
About Jason Kulpa
Jason Kulpa is a San Diego’s two-time winner of the Most Admired CEO Award of the San Diego Business Journal and also a semi-finalist for the Ernst and Young Entrepreneur award. Kulpa is a serial entrepreneur and the Founder and CEO of UE.co, San Diego’s Fastest Growing Business multi-year award winner, and a Certified Great Place to Work multi-year winner.
