$1 Million is Not That Much
NEW YORK (MainStreet) If your financial goals include the elusive quest to feel wealthy, a recent report says $1 million won't cut it anymore. Feeling wealthy is subjective, of course, but most people define it as the ability to live without financial constraints. And that's a luxury with an ever-increasing price tag. According to UBS Investor Watch, the threshold to feel wealthy has risen to $5 million of investable assets.
But don't let that number discourage you. Regardless of your current financial situation, there are five main steps you can take to increase your net worth.
First, it helps to set a specific goal. Money is just math, after all, and if you know how much you want to accumulate you can work backwards to figure out a plan to achieve your goal. The richest people in the world have a tendency to set seemingly unrealistic goals and then achieve them. Don't sell yourself short.
Clipping coupons is nice, but in order to increase your net worth you really need to increase your income. If you're overdue for a raise, sharpen your negotiation skills and set up a meeting with your boss. If that doesn't work, it may be time to look for a new job. You might even consider starting your own business or supplementing your income with outside work or consulting.
Once you've got a goal and an upward trajectory for your income, it's important to save consistently. No one ever got rich from spending freely. For the truly wealthy, that part comes later, after they've reached financial independence. Why struggle to lease a Lexus on your way to the top when you can buy a Bentley once you get there?
Investing is a necessary part of accumulating wealth and achieving financial security. A little education can go a long way. Be aggressive where you can, but don't let excessive risk taking ruin your portfolio. The most successful investors divide their money into separate buckets, earmarked for various goals with different risk and return profiles.
Growing account balances are only part of the picture. To increase your net worth you also have to reduce the amount of debt you have. Systematically pay down what you owe, starting with the highest interest rate loans first.
Stay focused and motivated by keeping track of your net worth overtime. And don't be afraid to increase your goals as you make progress. It goes without saying that the higher your net worth, the wealthier you'll feel.
--Written by Lauren Lyons Cole