In the area of personal finance, there are a lot of different numbers that we are all concerned about. However, there is one overarching number that fully captures how effective your personal finance efforts are: Your Net Worth.

By knowing where you stand financially, you will be:
• More mindful of your financial activities
• Better prepared to make sound financial decisions
• More likely to achieve your short-term and long-term financial goals.

Net worth is a robust indicator of your personal financial health. A positive and increasing net worth indicates good financial health and cushioning against financial setbacks.
With this in mind it is not only important for you to know what your net worth is but what your ideal net worth should be based on your current conditions.

Tips on how to improve your Net Worth

Your net worth is a great measure of your personal wealth and you want that number to grow over time. Measures to grow your net worth can be broken down into 2 main categories:

I. Grow the value of your assets
• Increase your income by exploring multiple streams of income.
• Reduce the money you spend on depreciating assets.
• Invest your money wisely.
• Avoid making unnecessary money mistakes
• Have appropriate insurances to manage risk and preserve wealth.

II. Reduce the cost of your liabilities
• Avoid borrowing more than you need to.
• Create a strategic debt payoff plan. You will want to work on paying off debt, but do it in a smart way. For example, pay off high-interest consumer debt quickly as opposed to a very low interest mortgage.

Above all have a personal finance strategy. Ideally, your net worth continues to grow as you age – as you pay down debt, build equity in your home, acquire more assets, etc. We are better off by creating a strategy that helps us to manage our money better.

Source:
Axis Pension Trust Ltd.
Web : http://www.axispension.com