5 Steps To Increase Your Net Worth


Want to increase your net worth? There’s a few different ways to get there. Below I outline the steps that, if followed, will help you increase your net worth by over $25,000 per year.

What does increasing your net worth by $25,000 mean? It means that every 4 years your wealth will grow by $100,000. Every decade you’re upping your wealth by a quarter of a million dollars. If you’re out of debt, that means you’re banking 100% of this cash. If you’re in your twenties, doing this means you will retire a millionaire. See? Isn’t this cool? Don’t you want to do this?

How to Increase Your Net Worth

Step 1. Focus on increasing your income to earn $50,000+ per year

The easiest way to increase your net worth, is to increase your income. I know this seems obvious, but you’d be surprised how many people think they can “get rich” on tragically small salaries. Saving 30%+ of your income is fantastic — but it won’t increase your net worth by $25,000 per year if you’re only bringing home $2,000 per month.

For this reason the best thing you can do is, instead of focusing your energy on slashing your budget, focus on bringing in more money. There are a few ways to do this. The easiest and most lucrative is to negotiate your salary.

Wouldn’t it be nice to make more money to do the job you’re already doing?  That’s what negotiating your salary gets for you! The second best thing you can do is find a side hustle.

A side hustle is any kind of part-time work that lets you bring in extra money on top of your day job. This can be anything from babysitting to selling collectibles on eBay. Even something that brings in as little as $50 per week will add $2,600 per year to your income.

Related Post: The Logistics of how to ACTUALLY Increase Your Net Worth By $25,000 Per Year (includes a peek at my old paycheque!)

Step 2. Aggressively pay off your debt

If you’re carrying a balance on a credit card, their scary interest rates are eroding any wealth-building progress you’re making. Not only does eliminating debt increase your net worth, it makes it easy to further increase your net worth by other means because you’re no longer burning money up with interest.

For example, for every $1,000 you owe at 15% interest, you’re losing $150 per year to that expense. This means you actually have to pay $1,150 just to make your net worth budge $1,000! On the other hand, if you invest $1,000 at 3%, you’re gaining $30 per year. The net worth difference between a -$150 drag and a +$30 boost is $180.

This means that a debt-free person is already almost $200 ahead for every $1,000 in the net worth game than a person that has debt.

This is obviously super simplified math for the purpose of example only, and real numbers will be different due to things like compounding and monthly payments, but the logic still stands. No matter how you cut it, being in debt is expensive!

If you have large debt balances like student loans or car loans that will take a few years to pay off, don’t beat yourself up too much. More likely than not, it took you a few years to get into debt, so it’s going to take you a few to get out of it!

The important thing is that you make debt repayment an urgent financial goal, and strive to pay off all your debts ahead of schedule. The sooner you get to debt free, the less interest you pay, and the more money you’ll have to increase your net worth!

Step 3. Save 25%+ of your income

You can only increase your net worth at a rapid pace if you’re saving a high percentage of your income. Most financial advice will tell you to save 10% of your take-home pay, but the truth is, if you want to be wealthy you will need to save 25% or more. If this seems insane, I promise it looks a lot less intimidating broken down into different accounts and goals.

For example, a few of the things I’m working on right now include building a $10,000 emergency fund and saving $25,000 for retirement. I will contribute $500 per paycheque to my emergency fund and $400 per paycheque to my retirement accounts. Assuming I get paid twice per month, this translates to $1000/mo into my emergency fund and $800/mo into my retirement accounts, boosting my net worth by $1,800 per month or $21,600 per year. If I use my income tax refund to top up my accounts, I’ll hit the $25,000 annual savings goal no problem!

Step 4. Don’t buy cars and houses

If you think saving more than a quarter of your income is crazy, it’s probably because you’re carrying a ridiculously huge car payment or a mortgage.

A car is not an asset, a car is a money-hungry black hole, much like a child except quieter and can be left unattended for long periods of time without consequence. As for a mortgage, I don’t even want to touch this because I will want to go into super rant mode but I would STRONGLY discourage you from counting your home in monthly net worth calculations (annually or every 2-5 years makes more sense).

I don’t really care if your house is worth $450,000 now and 6 months ago it was valued at $400,000. That’s nothing but paper profits and unrealized gains, it’s not money in the bank. Lastly, making your monthly mortgage payment is doing very, very little for your net worth in the early years of homeownership since the bulk of it is going towards interest. You are running on a hamster wheel of a false sense of progress, chasing a dangling carrot that is probably laced with cyanide. If you don’t believe me, ask an American what it was like to have their house foreclosed upon in 2009.

Full disclosure: I was born without the gene that makes all bright-eyed and bushy-tailed millennials reach for the holy grail of “owning a home”. I know that eventually I will grudgingly take on the burden of a mortgage, but it will be in my thirties and  because it’s the only way I will be allowed to own a dog since renting with pets is basically impossible in my city.

Step 5. Invest in income-generating assets.

This means use your money to buy things that make you more money. I try to keep a relatively balanced portfolio, and I’m partial to dividend stocks. More often than not, when I purchase a new investment, it will generate a monthly or quarterly payout (with the exception GICs and some mutual funds, which pay out annually).

I always reinvest this income into more income-generating assets. The goal is to maximize passive income to relieve some of the net worth boosting duties of your salary. In my mind, the more money you can get without working, the better.

Increasing your net worth take discipline and commitment

But it’s a worthy journey for long-term financial security!

You Might Also Like

About The Author

50 Comments. Leave new

  • Good luck on your goal – with dedication, hard work and some luck I’m sure it’s possible. And yay for us MBA gals!

  • Those are awesome goals. My goals are to increase my net worth by $2500 – $3000 per month, and that’s without adding returns. Realistically, I think I’d be better off aiming for $2000 per month and then the rest is just gravy. But we will see how I do on this goal first.

  • Julie C. from Washington, DC
    November 4, 2013 8:14 am

    Bridget, thank you so much for responding to my question with such an amazing answer!! I really appreciate it. Like you, I am also into personal finance and love to learn new ideas on ways to become even better at managing finances. I saw that Gail interviewed you, congratulations!! That’s so cool! My favorite is Suze Orman, but Gail is a close second!!! Thanks again, your new friend – Julie C. from Washington, DC.

  • #1 is my current goal. The rest I already do/can handle once I get #1 out of the way. Sigh.

  • this is awesome! thanks for sharing this.

  • I could argue against putting money into income producing assests if you really want to grow your net worth quickly. However, your reasoning is sound and in the ending investing in quality options is really the key. Besides I’m also a huge fan of dividend growth investing and this year am on pace to hit a giant milesetone.

  • Love this post, I just have one question. I make over $50,000 and my take home is about $3,000- maybe it’s just the deductions at my work – but are you suggesting that you live on about $1,0000 a month for housing, food, leisure, entertainment etc? I love the way you’ve broken down this strategy and am interested in how I could make this work for me one day.

    • It will largely depend on deductions and your expenses. $50,000 is a good start, at least in Canada, because then a $25K net represents half of your gross income and if you’re investing in things like an RRSP you can claim it on your taxes. However, if your expenses are big it will be more of a struggle. At my last apartment my rent was only $750 so after food and bills my total living expenses were just under $1,100 per month. I don’t live quite that frugally now but I’m still under $1,500 per month.

      That said, I’ll admit I never actually made only $50,000 when I managed to increase my net worth by $25,000 year per year. My first year of full-time work, I grossed over $60,000. If I hadn’t left my job to go back to school, I would have finished 2013 with a gross income of nearly $80,000. My full-time salary has always made up the bulk of my income but I supplement with blogging, freelance writing, babysitting, selling stuff on eBay & Kijiji, as well as earning passive income from the investment assets I’ve already accumulated.

      My take-home at $50,000 was about $3,200 but part of my deductions was into an employer retirement plan which I factored into my net worth calculations!

  • I have the income (combined household at least, not each since I’m freelancing now) and I’m working on the debt. I’m really looking forward to the savings part — putting so much towards debt is depressing :(.

    I keep getting more and more convinced that I want to go carless. I just want to see how winter in Portland goes first. That would free up over $500 a month for us!

  • All sound pieces of advice.

    The final one is of course… don’t spend excessively if you don’t need to. A rule I kind of avoid when I am bored and not working and end up going to Holt Renfrew to “browse”.

    Just plain SAVING your money will be better than nothing.

    My current dividend income is on average $200 a month, but don’t rule out just investing in index funds for long-term growth… getting money in dividends is nice (it reinvests back into buying more stock in my case), but it isn’t the only way to get rich because you need a whackload of capital to have any decent dividend income.

    • Your dividend income is an average of $200 a month but how much do you have invested in your portfolio? I got $1k and i’m only making a dividend income of $.12 a month!!! Of course I plan on keeping them for 5 years but since I just began last month, i’m nervous by the low amount…

  • This sounds like a great plan. Given your comments I would love to hear your views on income generating assets in real estate investing. I am hoping to create income generating assets and dividend paying stocks is one, but I am also considering cash flowing rentals.

  • Good advice, but one additional caveat: if you live in an expensive city with a relatively low income. I don’t have a mortgage or car payment (or even a car), but I do have rent that eats up 54% of my monthly income. Could I lower my rent? Sure, if I lived in a shit-hole in an unsafe neighborhood. Part of residing in NYC is the massive cost-of-living. But, living in an expensive city is a choice I make. I also don’t have debt, so I can sock that money away into savings.

    I’m in the sad category of folks who don’t have the salary to magically grow their net worth. Luckily I started saving super young!

  • I’m doing/have done all of these except for number 4. We have a house and I bought a car. I don’t include either on my net worth calculation and don’t consider either assets. I don’t even consider our home an asset even though we have a tenant/income suite on the property. Housing is too volatile. We bought neither the car nor the house as assets.

    Not having kids – that’s a sixth step to increasing your net worth by 25,000 per year.

    One of my biggest strategies as far as being able to increase my net worth so much is taking on side jobs and working more than my regular job. I make over $50,000 in my day job, but I make at least $60,000/year with all of my side jobs and income (not including any interest income or rental income – that’s all extra).

  • Wow, this is good. Simple, straight forward and it is working (I know, I seem to have the same genetic make up as you). I cannot emphasise enough your point about owning a car or a home – this is left over from a time when buying a house may have really made sense but today with all changes in labour markets it doesn’t.

  • I have sat down many times and calculated out quickly I can grow my retirement accounts once I can move my student loan payments into investment accounts. I have to get over that hill first but seeing the numbers is definitely motivating for me to continue to attack my debt with a great fury.

  • I’d love to see the post where you reveal the secret to getting those jobs that make over $50k. A lot of us just aren’t there yet, unfortunately. A lot of us definitely wish we were. : (

    • Yeah, it’s now 2016 and after graduating at the start of the 2008 recession I spent most of my 20s chasing (very hard) minimum wage or short term contract jobs just to pay the bills. The economy has picked back up in the last couple of years, but I still don’t know anyone on a decent wage. I save and invest what I can, but most graduates I know are now hitting their 30s and just starting to land the sort of entry-level career ladder jobs they would have had at 21 pre-recession. Some (like me) have managed to pay off our student loans, but having more than $800 in expendable income per month is like fairy dust here – non-existent! : (

  • This is a great post.
    I have a question slightly off topic – I read your post on what you should have in retirement by age 30 and was just wondering Bridget, what do you expect your net worth to be by age 30?
    I know it depends in a lot of circumstances, but do you have a goal in mind?

    Best of luck!

  • Step 6 – Have an employer that gives you an awesome RRSP match and other financial benefits, then take it to the bank!

  • Awesome plan! It’s interesting watching you go from YOLO to I’m going to save everything. What changed?

  • This mostly great advice, but I think she skipped over a lot of the net worth building aspects of home ownership. Yes, it’s silly to count unrealized gains by assuming that your house value increases based on the current market, but if you don’t live in a bubble market (so not Toronto area) and actually paid a reasonable price of your house is worth, when you make accelerated mortgage payments and mortgage pre-payments towards your principle, it’s very realistic to gain $3000-7000 in net worth based on the equity you own in your home every year. And that’s really just based on selling your house for around what you paid for it, and just not having as much mortgage to payback. Considering how low interest rates are right now, making mortgage principle pre-payments is like putting money into a savings account with an interest rate much higher than what most conventional banks are offering. And that money goes straight into your net worth/equity building.

    Now home ownership is expensive (even if mortgage payments are less than rent in some places, there are other costs that don’t make it “cheaper”) and it’s not for everyone, but the “bubble” market scare going on in certain areas of the country should not take away from the actual gains that can be achieved (over time!) from how ownership. But yes, if you are in a position that would have you buying and then selling a house in less than a 5 year period, that will do very little to increase your net worth.

  • Great post! Really helps to simplify saving and sticking to a plan.

  • Hi Bridget,

    Great blog. Your post provides great advice for newly graduated students, and a light at the end of the tunnel of academic debt!

    Allow me to critique your recommendations…

    1. Investing in real estate early on can be an excellent way to build wealth quickly. Indeed, real estate valuation will fluctuate, as an equity portfolio would, but the ability to leverage using a mortgage, at a ratio of 5:1, allows owners to benefit from a net-of-inflation capital appreciation of approximately 8% with a 20% down payment, assuming a regular year’s inflation of 2%. In other words, for the regular investor, it is extremely difficult to find an investment option that will provide you with the same operating leverage. That being said, over the last 20 years, Canadian real estate has grown in value significantly more than the CPI.

    2. The use of a RRSP early on in life is not always recommended, especially in the case of a young educated professional. The marginal benefit of investing in a RRSP, aside from tax-free compounding, is the very difference between your CURRENT marginal tax rate and your marginal tax rate in RETIREMENT. In other words, in your case, you are likely to generate a larger income in retirement (given your graduate certifications), as you are just beginning your career. Financial professional would recommend using the TFSA as much as possible instead, and perhaps even a non-registered account depending on the circumstances. THAT BEING SAID, in the case of an employer-matched defined contribution plans (or group RRSPs), it is often advised to contribute as much as needed to get the maximum employer contribution.


  • Not sure about Canada, but the mortgage interest is tax deductible in the US, which works in your favor early on. I just began a 30-year fixed at 3.4%. I earned 23% on the savings last year, and plan to hold it until my interest paid is nearing equilibrium with principal. Does that seem sound, or does anyone have a better idea?

  • Great post. Love your 2 cents on owning a home. Too many of my friends like to think owning a home is the greatest investment there is. I love crushing them by pointing out the amount of interest that will be paid over the years, home owners insurance, property taxes, cmhc insurance they’ll have to pay because “your a chump and don’t have 20% to put down!” Then I carry on with the upkeep and repair costs that are unforseeable in the homes future. The factors that some don’t consider! Got me all worked up. Love it!

    • righht??? It gets me SO frustrated!

      I’m the most frustrated when my friends majoring in FINANCE are like, “I think I’m going to buy a house”. They deserve an F!

    • A home is a terrible investment! If you need to have one to live in it, fine, treat it like rent (ie a monthly expense). Not as an investment unless you are earning rental income. Compare it to an index fund… what if you had to pay 5 percent to buy, 10 percent to sell (and leave it on the market for 3 months), pay annual taxes for owning, and maintenance/ repairs on a mutual fund, would that be a “good” investment choice?

  • Don’t buy a house or car? Ok, so be a rich homeless person? Great idea.

    Rent and mortgage are about the same amount per month.

    Roughly 30% of my income is taken out in taxes, social security, etc. After that there’s car payment, mortgage, electric, gas, water, trash, cell phone, internet, gas for car, food. After that I’m lucky if I have any money leftover. I make pretty close to your step 1 “make 50k / year”. Save 2k a month? After taxes I barely even make 2k / month.

    • If you didn’t have the car, then car payments, gas, and car insurance would be money that could all go into your savings. Utilities and cellphone/internet is just a matter of getting the cheapest services possible. Food spending depends on how you eat but it’s pretty cheap in the US so you can eat well for $200/mo.

      If you’re not earning over $50,000 annually then it will be a struggle to put $2,000/mo away, so save $1,000 per month if that’s more reasonable. Being “almost” or “near” $50,000 doesn’t count — you have to be over. Adjust down until your income increases.

  • Brite Bridget is all money brains & im lovin it & we should all be doing this too.

  • theres a difference between owning a house you can afford and one you can’t afford and one that increases your net worth. Buying a house and having a mortgage is cheaper then renting in most areas and you get more bang for your buck. So if you buy a home that saves you money in the rent column of your budget then you are saving money every month. You are also paying off principle and building equity. Buying a house comes down to making a very well though out choice, i wouldn’t eliminate it from your plans but i also wouldn’t force it. All in all your going to be paying someone’s mortgage anyways.

  • Loved the article and go Canada. I love the Canadians for some reason. But I love the idea of investing money into things that make you more money. I am currently doing the same. I have split investing plan, one safe, one risky. If you would like to know more of how I invest check out http://pennystk.com I would totally appreciate it Eh ;p

  • I like your articles. I have to disagree about not buying a house. The equity builds on a house. It does not build paying rent or someone elses mortgage.

    • Depends on where you live. I’m in Canada’s 3rd hottest housing market behind Vancouver and Toronto. The average single-family detached home costs over $500,000 here. Renting is far cheaper than having a big mortgage. Also consider that for say, a $450,000 mortgage on that $500K house, the bulk of your payment goes to interest not equity. You’re essentially paying rent to the bank, your real landlord. To add insult to injury, the general consensus is that the Canadian housing market is overvalued, and overdue for a correction. While some areas are more vulnerable than others, considering a 20% or even as small as a 10% decrease of your home’s value will rapidly eradicate a substantial amount of equity you may have built up.

      The affordability of homes in the USA paints a much different picture, and for many American citizens the benefits of buying a home far outweigh those of renting.

  • Smart girl & very good advice! I realize you’re Canadian (I’ll barley hold this against you), if you are single, we are a financial match!

  • Pretty good but, I disagree on the home ownership issue. There are still places that have reasonable pricing and owning a home that will be an investment is far better than renting. I purchased my home for 57K after the crash in 2009 and just sold it for 125K. The goal is not buying new. My mortgage is more than half of a regular rental rate for my area. So, not only are you saving money at some level but, you are increasing net worth as well. The caveat is… my girlfriends haven’t been impressed. But, really who cares about impressing anyone right now… I know the path I’m on.

    • Buying a house for $57,000 is impossible in Canada. The average house price in my city is over $500,000, and renting is on average $500 to $1,500 per month cheaper than paying a mortgage.

      If I lived in the USA, I’d definitely look at real estate as a solid investment, but here it can cost someone more in the long run if they don’t go in with a sizeable down-payment or secure a good rate.

      • In the area that I live, there is not a single home for sale less than $1M, for old 2 bed 1000 SF home. Housing prices only go up from there… This is NOT an investment. Rent is cheaper. However, I could buy a home outside of my area very cheap and rent it, if I think being a landlord is not a full time job (obviously done it before, and not what I consider joyful.) Good luck to those who own a home in a place far from work where you drive all day commuting and are hardly even there to enjoy your home.

  • Lmao. I realized I was reading the rant of some dumb kid when I got to the “Don’t Buy … Houses” part of this. The author even acknowledges that the value if the asset can rise (and it will for most cases). How do those “paper profits” differ from a stock value increasing? You can still sell the house and get your profits (like stocks, there is a trade fee). Hell, you can buy the house simply to rent it out while you still live in an apartment. Even if you’re breaking even on the bank payments with what you charge your tenant (also considering maintenance costs) you’ll still be building equity that you can cash out later when you sell. Sure, housing might not be the author’s forte, but a lot of people have gained significant net worth from their homes. Not to mention a lot of entrepreneurs who have gotten rich doing so. Shit, a 15 year note means that you won’t be paying a house payment in 15 years (aside from taxes and insurance) – the time goes by faster than you’d think! The author has good intentions but is definitely off on the housing thing. There are tons of ways to build your net worth and it all comes down to investing in assets that appreciate in value. Pick any method that you like.

    • 1000% disagree with point on NOT owning a home. Peter Lynch (who this author im certain is not familiar with) advises not to invest until you own a property.

      • Hi Karl,

        Whether or not owning a home will be a profitable investment depends entirely on where you live. I would wager you’re NOT familiar with the Canadian housing market, which is currently grossly overheated. The average home in Canada is $500,000 — in major cities, it’s as high as $1 million. Not only does this make residential real estate inaccessible to wannabe homeowners, those that do manage to get their foot in the door are saddled with huge mortgage payments that prevent them from paying off debt and saving for retirement.

        • It’s the same in the UK. If you waited until you had enough money for a home before you began investing, then you’d be waiting a very long time. For most people under 35 it just isn’t a realistic option unless you a) have rich parents to contribute b) manage to get a ‘unicorn job’ that pays an ok salary or c) buy in the middle of nowhere, with low rental income, and pay for additional rent somewhere closer to work (which most people could never afford). Homes are just out of reach of the younger generation now. I’d rather start investing early on so at least I’m not wasting time and have something put by for retirement. When salaries don’t match living costs, then something has to give.

  • thanks for sharing such important information with us. All the 5 steps are very good.


Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.
You need to agree with the terms to proceed

This site uses Akismet to reduce spam. Learn how your comment data is processed.