High net worth clients are highly sought after by financial advisors and banking institutions alike. Many banks will offer significant discounts on interest rates and other financial products for people with a high net worth portfolio.<\/p>\n
Yet most people focus solely on earning a good income so they can afford to keep up with mortgage payments and car loan payments. Even if you have ginormous income, if you spend every cent you earn keeping up with payments and living expenses, you\u2019re essentially broke!<\/p>\n
If you\u2019re stuck in the pay-cheque or credit mentality, it\u2019s time for a shift over to a net-worth way of thinking<\/strong>. After all, real wealth isn\u2019t about how much you earn. It\u2019s about how much you keep and build<\/strong>.<\/p>\n Fortunately, with the right plan and discipline, it\u2019s possible for almost anyone to build up their assets far enough to become a high net worth client. As the foundation of your financial plan, determining Net Worth<\/strong> is STEP 1<\/span><\/strong><\/a> <\/strong><\/a>of the solowealth financial plan <\/strong>and should be completed annually. Here are some simple, yet powerful tips to help you build your net worth.<\/p>\n It sounds simple enough, but it\u2019s surprising how many people ignore this tip. If you spend less than you earn, you have more money to put towards building up your net worth. Work on cutting back your budget wherever you can. Spend with a priority list in mind and be prudent about purchasing a \u2018big-ticket item\u2019 such as a home or vehicle that swallows too much of your take-home pay. Understand that every dollar spent on interest for a higher mortgage along with higher property taxes, higher utility bills and higher insurance premiums, is money that should be in your pocket. If you have a fancy home and luxury vehicles, but you\u2019re not maximizing contributions to your 401(k) or IRA, you should be concerned. Purchase big-ticket items based on your ability to pay them off within a shorter time-frame. The STEP 3: Cash Flow<\/strong><\/span><\/a> <\/a>calculation of the solowealth financial plan makes this task a breeze. Complete this task every month and try to meet or exceed the amount you are able to save or invest every month.<\/p>\n <\/p>\n Bad debts are any outstanding loans that don\u2019t contribute towards building your overall wealth. Credit cards and car loans are usually considered bad debts, as they\u2019re used to purchase depreciating assets.<\/p>\n Pay off any high interest debts you have outstanding as quickly as possible. The payments on those bad debts are eating into your disposable income each month<\/strong>, which slows down your efforts to build wealth. STEP 7: Debt Management<\/strong><\/span><\/a> of the solowealth financial plan can help you break out of this destructive cycle with real solutions.<\/p>\n <\/p>\n Keep saving until you have a healthy emergency fund put aside to cover any unforeseen expenses that arise. Add to your emergency savings fund until you have enough to begin investing, even if it\u2019s on a small scale. Aim to save 5% of your net income for emergency savings<\/em> and 15% of your net income for investments<\/em><\/strong>. This means you\u2019re setting aside 20 % of your net income to help build your Net Worth<\/em><\/strong>. These numbers are not fixed in stone and can be adjusted as needed, but have a realistic savings goal that you aim towards, even if it\u2019s in small segments at a time. Apply STEP 2: Financial Goal<\/strong><\/span><\/a> <\/a>of the solowealth financial plan to help you with this task.<\/p>\n1. Spend Less Than You Earn<\/strong><\/h2>\n
2. Eliminate Bad Debt<\/strong><\/h2>\n
3. Use the Power of Compounding<\/strong><\/h2>\n