New to the Live Richer Challenge: Net Worth Edition? Learn more about it HERE.
Week 2: Increasing Your Net Worth
This Week’s Goal: To learn actionable ways to grow your net worth by increasing your salary, pursuing entrepreneurship, paying off debt, and more.
Today’s Easy Financial Task: Learn the fundamental steps necessary to increase your net worth.
How to rock this task:
- Create your budget and debt repayment plan
- Listen to the Brown Ambition Podcast episode: The Student Debt Show of Your Dreams
- Learn why saving while repaying debt is imperative
Welcome to another full week of tasks about growing your net worth.
Week 1 was all about fostering a Wealthy Mindset.
You wrote down goals for increasing your net worth. We also talked about what your net worth actually is to clear up any confusion.
Then we touched on the mindset you need to have to become financially free.
This week, I’m going to lay out some steps you can take to increase your net worth.
I’m not going to lie, you have a lot to do today, but if you want to achieve your financial goals, it’s going to take effort.
If you’re willing to do the work, I’m here to help you each step of the way.
Let’s do this!
How to Increase Your Net Worth
Let’s remember the simple equation that we use to calculate our net worth:
Assets - Liabilities = Net Worth
Based on that equation, there are two ways to increase your net worth:
- Increase your assets (items of value that you own, i.e., cash, investments, etc.)
- Decrease your liabilities (money that you owe and debt)
At a very basic level, to increase your assets and reduce your debts you must:
- Establish a budget. A budget gives your money a purpose. A budget can help you curb excess spending, so you have more money to repay debt, to save, and to invest in assets. These are all things that grow your net worth!
- Earn more money. Ultimately, being extremely frugal is not always the best answer to building your net worth. Bringing in more income may be necessary to attain financial freedom.
Today, we’re going to focus on getting control of your current finances via a budget, a debt repayment plan, and an emergency savings plan.
Then, the rest of the week I’ll provide specific ways that you can make more money.
I have a bunch of great resources that will knock your socks off, put money in your savings account, and help you destroy debt -- in that order!
Meet Your New Bestie - The Budget
A budget is the backbone of your financial strategy.
Think of a budget as the root system in the soil that helps a flower bloom. A budget is an anchor that keeps your overall financial plan in place.
If you don’t yet have a budget, learn how to create one here. It’s the first chapter of my best-selling book, The One Week Budget. It’s my gift to you. ?
Here’s a blank budget template I created for you called the My Money List. Use chapter one of my book to help fill your own My Money List out.
How to Eliminate Debt Like a Pro
Moving on to debt. I used a system called the Debt Snowball method to crush debt.
Here’s how to implement the snowball method in 8 steps:
- List all of your debts in order from smallest current balance to largest current balance. You can use the Debt List worksheet to create your list.
- Figure out how much money you can squeeze from your budget to repay debt.
- Make the minimum payment on all of your debt with the exception of the debt with the lowest balance that you have at the top of your list.
- Automate all of your minimum payments.
- Put all excess money you can squeeze from your budget to the first debt with the lowest balance on your list. (I suggest paying the lowest debt off first because early success will trigger an emotion in you to keep motivated.)
- After the first debt is paid off, apply all of the money you were putting towards your first debt to your second debt.
- Give your debt plan a TURBO BOOST whenever you can by putting any unexpected money (tax refunds, bonuses, commission, etc.) to the debt.
- Keep the same system going until you’re debt free. Yippee!!!
Remember, grab the My Debt List template here to help you complete this debt task.
Let’s Talk About Those Student Loans… Yikes!
If you’re dealing with student loans, here is an interview I did my co-host, Mandi on my podcast, Brown Ambition,
Listen to our Student Loan Debt Show HERE.
In this episode we talk about:
- Catching up on student loan payments when you’re behind
- Qualifying for Public Service Loan Forgiveness
- Paying for grad school
- How I REALLY got my federal student loan forgiven
- And more!
What About Saving?
We talked a lot about debt today.
I want to close out today’s task by stressing that saving while you pay off debt is highly important. You should be putting away some coins in savings because you’ll need to rely on them whenever you’re in a pinch.
The best thing you can do is start saving somewhere with what you have. The amount will blossom and grow as you stay consistent. Use your new budget aka Money List to help you save.
I also have some fabulous savings tips to share from Tara Jones of Your Pretty Pennies.
Here’s how to boost your savings:
- Separate your money - Have multiple accounts to keep your money divided up. Tara uses a money market account for her emergency savings. She has a checking account where her direct deposit goes for basic debit transactions. She has an employer retirement plan as well. It’s important that you don’t have your emergency savings or retirement savings sitting in your regular ol’ checking account where you can spend it freely.
- Save your tax refund - It’s tax season! Your tax refund can be a great starting point for savings.
- Get support - Making a change is always less fun when you’re doing it alone. That’s why we have the Dream Catcher: LIVE RICHER Forum! Reach out to others in the forum for support and encouragement while you’re saving. Having support can give you crazy amounts of motivation!
Not sure how much you need to have saved?
NerdWallet has an awesome and completely free tool to help you calculate how much your emergency savings should be.
Check out the calculator HERE.
Still think you don’t have the discipline to save? There’s an app for that. Try Digit.
Each week, Digit automatically analyze your account and look for the money you’ve kept in Digit for 3 months. You get 5 cents for every $100, every 3 months for as long as you keep saving.
It literally takes less than 5 minutes to get started with Digit.
I know you have 5 minutes. Don’t wait, click here to begin saving: http://thebudgetnistablog.com/digit
FYI: Digit is free for the first 30 days, then there’s a $5/month fee.
What’s Your Next Step?
Today’s tasks are meant to help you build a framework to increase your net worth.
The strategy behind building our wealth must include these basic steps:
- Creating a budget
- Creating a debt repayment plan
- Growing your emergency savings
If you have any questions about today’s tasks, be sure to hit the comments below.
Share what you’re working on with your accountability partner(s) as well.
Keep in mind, accountability means that you share actions you’re planning on taking with each other and then follow up to make sure things are gettin’ done!
Is your partner doing what they said they’re going to do?
Share what you’ve learned today with your tweeps:Woohooo! Today, I created a budget, debt repayment plan, and an emergency savings plan. Day 8: #LiveRicherChallenge #LRCNetWorth Click To Tweet
You can reach out to me here:
Facebook: The Budgetnista
Private Forum: Dream Catchers: LIVE RICHER
P.S. Don’t forget to get your free Live Richer Challenge: Net Worth Edition Starter Kit. GET IT HERE.
P.P.S. Here’s a copy of the Challenge Calendar. It’s a fun way to keep track of your progress.
Want to work through the Live Richer Challenge: Net Worth Edition in a workbook? It's part of a bestselling series!
Click the link below and get your copy.
My Lisa Rule: I have 4 sisters and Lisa is the baby (well she’s not a baby anymore). Of all of my sisters, I’m the most protective of her. Before I share any product or service with you, it must pass my Lisa Rule.
What’s the Lisa Rule? If I would not advise Lisa to use a product or service, I won’t advise you to. YOU are my Lisa. I feel protective of you and your financial journey.
Digit passes my Lisa Rule. Yes, I am an affiliate of Digit, and I earn a commission off of referrals, but I would not recommend a product or service that I didn’t believe was helpful and useful.