Growing your net worth is a marathon, not a sprint. Some people manage to retire with a net worth of $1 million. But rest assured that $1 million net worth is decades in the making.
The median net worth across all Americans is about $122,000. That’s a pretty impressive sum. And whether your net worth is considerably lower, higher, or comparable, you may be eager to boost it before 2023 wraps up.
If that’s a goal you’re going to set, it’s important to have reasonable expectations so you don’t wind up disappointed. You shouldn’t necessarily expect your net worth to grow by $10,000 in the next three months — not unless you’re getting some magical bonus at work that you’re able to sock away in the bank.
But you can take steps to grow your net worth modestly by the time 2023 comes to a close. Here’s how.
1. Pay off some credit card debt
Your net worth is measured by taking the sum of your assets and subtracting your debts. So let’s say you have $10,000 in savings, but owe $1,000 on your credit cards. That leaves you with a net worth of $9,000. If you manage to pay off that $1,000 balance, you’ll have a $10,000 net worth instead. Doesn’t that have a nice ring to it?
Now, you may be thinking, “How on earth am I going to pay off $1,000 in just three months?” But a side hustle might come to your rescue there.
In the coming weeks, many businesses are apt to need more hands on deck as the holiday season approaches. If you start exploring your options now, you might manage to line up a great side gig by mid-October. And if you’re able to earn $100 a week, you could be debt-free by the end of the year.
2. Give your savings account a boost
The more money you’re able to put into your savings account, the more you can grow your net worth. And if you’re wondering where to find the cash, the same advice as above applies — turn to a side hustle or take advantage of the gig economy.
Sure, you could also cut your spending. But let’s be real — who’s cutting their spending at a time when the holidays are right around the corner? If anything, you might actually end up increasing your spending due to buying things like holiday gifts, cards, and decorations. But if you’re able to boost your income in a way that outpaces your extra spending, you’ll still come out ahead.
Your net worth is measured based on all of your account balances, including retirement plans. If you’re able to put extra money into a traditional 401(k) or IRA, you won’t just have a higher dollar amount in your personal asset column. You’ll also shield some of your income from taxes. That could result in a higher refund that helps you grow your net worth nicely in 2024.
What’s more, if you have a 401(k) that comes with an employer match, contributing extra to it between now and the end of the year could go a long way toward building up your net worth. Let’s say your employer will match 100% of 401(k) contributions of up to $3,000 a year, and you’ve put nothing in so far. If you manage to contribute $3,000 between now and December thanks to your side hustle, you’ll end up with $6,000 in your 401(k).
The result? An even higher boost to your net worth.
Growing your net worth is something to focus on doing over time. And you don’t want to put too much pressure on yourself on a near-term basis. But you should know that there are ways to grow your net worth modestly over a short period. If that’s important to you, then these moves are worth aiming for.
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