Net worth is supposed to be the gold standard of financial progress. Add up everything you own, subtract everything you owe, and voilà—you get a number that supposedly reflects your financial health.
But here’s the truth I’ve learned (the hard way, and the practical way): your net worth isn’t just about the number. It’s about the choices you make to grow it, protect it, and align it with the kind of life you actually want.
You can hit a “high” net worth and still feel broke if your choices lock you into debt, burnout, or a lifestyle you don’t enjoy. On the other hand, you can have a modest net worth and feel incredibly wealthy if your money supports freedom, flexibility, and peace of mind.
What Is Net Worth?
Your net worth is simply what you own minus what you owe. Think of it as your financial report card. It tells you, in one number, how you're doing in terms of building wealth. And unlike income, which is what you earn, net worth shows what you keep—what’s left over after the bills are paid and the debt is accounted for.
When you subtract your liabilities from your assets, the number you’re left with is your net worth. For example, if you own $100,000 in assets (like a retirement fund and a paid-off car) but owe $40,000 in student loans, your net worth would be $60,000.
The Turning Point: From Numbers to Choices
For a long time, I tracked my net worth obsessively—down to the dollar. I checked spreadsheets weekly. I celebrated small gains and panicked at small dips.
Then I realized something: my stress wasn’t going down as the number went up. The growth only felt “good” for a moment before the next milestone moved the finish line.
That’s when I shifted focus. Instead of asking “What’s my net worth today?” I asked “What choices am I making that support long-term growth and freedom?”
That mindset shift changed everything. The number became a byproduct of my decisions, not the definition of my financial worth.
What Makes Up Your Net Worth?
To fully understand how to grow your net worth, you need to know what goes into calculating it. Net worth is made up of two primary components:
What counts as assets?
Your assets are anything you own that has value. Here’s a closer look:
- Cash and checking/savings accounts
- Investments (401(k), IRA, brokerage accounts)
- Real estate or home equity
- Cars (at current market value)
- Businesses or intellectual property
- Valuable personal property (art, collectibles)
What counts as liabilities?
Your liabilities are any debts or financial obligations. Here’s a breakdown:
- Student loans
- Credit card balances
- Mortgage
- Auto loans
- Personal or business loans
- Medical or tax debt
The Choices That Actually Grow Net Worth
Here’s the thing: net worth grows when you consistently make choices that strengthen assets and reduce liabilities. But the path doesn’t look the same for everyone. These are the categories I’ve found matter most:
1. Spending Choices That Protect the Gap
Your net worth depends on the gap between what you earn and what you keep. Overspending shrinks it, intentional spending widens it. This isn’t about cutting out lattes—it’s about knowing what adds real value. For some, that means driving a reliable used car instead of financing a luxury one. For others, it’s choosing to rent in a less trendy neighborhood to save for a down payment.
2. Saving and Investing Consistently
The consistent choice to save—even modestly—compounds over time. A Fidelity report in 2023 showed that investors who stayed invested through market dips had 2.5 times more wealth after 15 years than those who pulled out temporarily. The choice here is discipline, not timing.
3. Managing Debt Wisely
Debt isn’t just a liability—it’s a drag on net worth growth. Paying off high-interest debt frees up cash flow and accelerates growth. Choosing to avoid lifestyle debt (like financing vacations) protects future you.
4. Career and Income Decisions
Salary matters—but so does how you approach career growth. Negotiating raises, pursuing skills that keep you marketable, or diversifying income streams all strengthen the income side of your equation. These are strategic choices, not passive outcomes.
5. Protecting Assets with Insurance and Planning
It’s not flashy, but choosing to insure your health, home, and income protects your net worth from sudden setbacks. Financial freedom isn’t just about growing—it’s about protecting what you’ve built.
Building Wealth in Your 20s and 30s
For many, your 20s and 30s are when you're laying the groundwork for your financial future. During these years, you’re likely balancing entry-level salaries, paying off student loans, and starting to invest. While it may feel overwhelming, time is on your side, and small, consistent steps can make a huge difference.
Focus on Net Worth Awareness
Most people in their 20s have low—or even negative—net worth thanks to student loans. That’s not a moral failing. It’s just math.
What matters is that you start paying attention. Set a reminder to check your net worth quarterly. Use a simple spreadsheet or a tool like Mint or Empower to track it. Just knowing your number is a powerful first step.
Prioritize Debt Repayment and Emergency Savings
Paying down high-interest debt (like credit cards) offers a double benefit: it reduces liabilities and frees up future cash flow. Aim to get rid of debt with interest rates over 7–8% before investing heavily elsewhere.
At the same time, build an emergency fund. Even $1,000 to start can keep you from relying on credit cards in a pinch.
Take Advantage of Employer Benefits
If your job offers a 401(k) or similar retirement plan with a matching contribution, don’t leave that free money on the table. Contributing even a small percentage of your paycheck to retirement accounts in your 20s and 30s can result in exponential growth thanks to compound interest.
Invest Early and Often
The earlier you start investing, the longer your money has to grow. Think of the stock market as a long-term play and prioritize low-cost index funds or ETFs to build wealth without unnecessary fees.
If you save $200 each month starting at age 25 and earn an average annual return of 7%, you’ll have over $240,000 by age 55. Starting just ten years later would leave you with half that amount.
Making Big Moves in Your 40s and 50s
Your 40s and 50s may bring higher earning potential, but they also come with increased responsibilities like a mortgage, college tuition for kids, or caring for aging parents. Here’s how to grow your net worth during these crucial decades:
Revisit Your Budget
Your spending habits may have evolved, so take time to reflect on where your money is going. Trim unnecessary expenses and redirect that money toward savings or investments.
Accelerate Debt Reduction
If you’re still carrying debt, now is a good time to double down on paying it off. That could mean refinancing your mortgage to lower your interest rate, or putting more toward credit cards or personal loans.
Maximize Retirement Contributions
This stage of life is ideal for increasing your contributions to retirement accounts. If you're 50 or older, take advantage of catch-up contributions to your 401(k) or IRA. These allow you to put extra money away, giving your retirement savings a final push.
Diversify Investments
Focus on diversifying your portfolio to include a healthy mix of stocks, bonds, and other assets. Reassess your risk tolerance as you get closer to retirement age.
Preserving and Growing Wealth in Your 60s and Beyond
Your 60s are often when you shift from building wealth to living off it. According to Federal Reserve data, the median net worth for Americans in their late 60s and early 70s is $266,400. This stage brings new questions about legacy, longevity, and living meaningfully.
Develop a Withdrawal Strategy
Building wealth is one thing; using it wisely is another. Work with a financial advisor to create a withdrawal strategy that balances your needs with the goal of ensuring your savings last throughout retirement.
Minimize Taxes
Strategic withdrawals from taxable, tax-deferred, or tax-free accounts can help you minimize tax liabilities. Speak with a tax professional to optimize your income strategies.
Downsize Thoughtfully
If maintaining a large home no longer makes practical or financial sense, consider downsizing. This can free up equity, lower maintenance costs, and even eliminate mortgage debt.
Protect Your Assets
Ensure your wealth is preserved by solidifying an estate plan, updating insurance policies, and reviewing beneficiaries. Long-term care insurance may also be worth considering to protect your finances from costly medical expenses.
Habits That Boost Net Worth at Any Age
No matter your life stage, some habits are universally beneficial when it comes to building net worth. Here’s a quick rundown:
- Track Your Progress: Regularly calculating and reviewing your net worth keeps you motivated. Free tools like Mint or Personal Capital make it simple.
- Invest in Yourself: Whether it’s advancing your career, learning a new skill, or starting a side hustle, investing in your earning potential can significantly increase your income over time.
- Stay Disciplined: Financial setbacks happen, but the key to success is staying consistent with your savings, investments, and long-term goals.
Building Wealth by Redefining the Win
The day I stopped seeing net worth as just a number was the day money started working for me instead of the other way around.
Growth became less about chasing milestones and more about asking: Does this choice build freedom, protect security, or align with my values? When the answer was yes, I knew I was growing—even if the spreadsheet didn’t move overnight.
And that’s the piece most advice misses. Net worth isn’t about being the highest on the leaderboard—it’s about being intentional with the choices that shape your financial life.
So, take a look at your own habits this week. Don’t just ask how much your net worth increased. Ask what choices you made to grow it in a way that actually serves you. That’s where the real wealth is.
