Finding financial success in life is never something that should be taken for granted. Lots of people have grand aims and big plans, but they never get to where they want to be. And often, that comes down to not planning properly and failing to make the right steps to grow their wealth over time.
This is, of course, something that happens over a period of time and you certainly shouldn’t expect it to happen overnight. But growing your net worth is something that you have control over. The decision you make today will impact the size of your net worth in the future, and there’s no doubting that.
So if you want to learn more about what it takes to grow your net worth sustainably over a period of time, you’re in the right place because it’s exactly what we’re going to talk about today.
More people than ever are learning about the importance of having goals that really guide them and help them get to where they want to be. When there’s a lack of structure to a person’s personal and financial goals, they tend to fall by the wayside far quicker, and that’s never a good thing. The goals people set for themselves these days need to be clear and specific in order for them to also be effective. That’s why many people use SMART goals, and that’s something that you might want to do as well.
Investing money is more important than ever before, and as we’re seeing this year, it’s something that has to be done with a long-term outlook. Many of today’s generation have damaged their finances and been burnt by short-termism. It’s a problem but also a lesson that’s already been learned by many. Adventures in meme stocks and crypto have had negative consequences for many, and that’s usually a result of wanting to get rich quickly. They’ve not learned the lesson that careful and consistent investing is far better.
Divident-paying stocks are now seen as a far better option than any other, and younger people are catching onto this. Dividend stocks are stocks that pay out profits to their shareholders every year or multiple times per year. That means that when the business is doing well, the shareholder sees the benefit. It also means that even if the price of the stock is not rising or even falling, you still get to make some money as a holder of the shares, which is always nice.
As we’ve discussed, risk management is a lesson that’s bene learned the hard way by many of today’s young investors. And risk management skills will likely improve as a result of the mayhem of the last few years. As many stock traders and investors will tell you, you need to get burnt at least once to understand the realities of investing first-hand. It doesn’t matter how many times someone else tells you to manage your risk, you only learn when you experience it yourself. It’s better if less than 5% of an investment portfolio is dedicated to risky assets.
Today’s generation seems to be well-versed in the nature of debt and this seems to reflect a wider cultural shift in being willing to talk about such issues. The debate around student loan debt and forgiveness could be seen as an example of that. As a result of that greater awareness, lots of young people today are avoiding debt or learning the importance of paying it off faster, especially when the debt is a high-interest form of debt that grows quickly.
Avoid Comparisons
It can sometimes be tempting to look at other people and wish you had made the decisions they had made and wish you were in their position. But when it comes to money and your net worth, it doesn’t make much sense to make too many comparisons. The truth is there’s always going to be someone richer than you and more successful. If you compare your bank balance to Cardi B’s net worth, you’re probably not going to feel great about it. So, instead, remain as focused as you can on yourself and your own personal situation.
Debt problems and other financial problems often end up arising when people don’t live within their means. This is a reality that hit every generation of young people sooner or later. Yes, it’s all well and good to have fun in your 20s, but people eventually come to the realization that in order to grow their wealth and improve their financial situation, they ultimately need to start living within their means. Financial education plays a big role in truly understanding what it means to live within your means too.
The way in which you invest your money in assets is important too, and the housing bubble is currently teaching people this. Buying a new car is a mistake lots of people make when they’re young. It’s a depreciating asset, meaning it won’t hold its value well and when you eventually come to sell it, you’ll almost certainly get significantly less for it than you initially paid. Assets that are more likely to appreciate include real estate, for example. And the same applies to the stock market over the long term.
Plan for Your Retirement and Make the Most of the Most Employer Incentives
Having a retirement plan in place is certainly something that’s very important and something that you shouldn’t overlook. If your employer has any kind of retirement incentive plan in place that you can make the most of, you should go ahead and take part in that. Lots of employers will match the amount of money you put towards your retirement, and that can benefit you a lot over the long term, so don’t overlook it.
In recent times, lots of banks have offered very poor returns in terms of interest rates. This meant that people were less likely to save, but today’s generation is for the first time starting to see that change. It’s a lesson that many are learning fast. Interest rates are now rising as a result of the Federal Reserve raising central bank base rates. That means savings interest will increase, and those who are wise will see the benefits of that.
Sadly, everyone learns the lesson of how important emergency funds are sooner or later. There’s no getting away from the fact that things go wrong in life and sometimes unexpected things happen. Young people always experience that first-hand eventually, whether they already have an emergency fund in place that they can turn to or not. Having some money sitting there for a rainy day, and backing you up in the toughest of times can be really important.
As you can see, there are lots of positive steps you can take if you’re focused on growing your net worth over time. As we’ve discussed it’s important that this is done in a careful and sustainable way. The tips we’ve discussed here are focused on long-term and lasting growth, and that’s path you should want to take with your net worth too. Extreme gambles lead to extreme regrets.
Cory Maki is a Staff Editor and the Business Development Manager at Grit Daily. Email [email protected](dot)com for PR pitches, advertising, and sponsored post inquiries.
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