It is important that we increase our networth as we age to make sure that we have enough for retirement. Having the right amount of networth at each stage of your life gives a life of assurance that you are on a right track. There is some folk who choose to go to the extreme of increasing their networth fast to retire early. These people are called the FIRE movement activist. The FIRE movement stands for financially independent retire early. From learning how to increase their salary fast, to taking on profitable side hustles, to knowing how to invest their money. The FIRE movement is a great community to learn how to increase your networth fast.
My Journey into FIRE
I became obsessed with trying to achieve FIRE at an early age using the FAT FIRE strategy. Through 4 years of struggling, I was able to achieve $100,000 by 24 years old. I was able to grow my networth quickly at an early age because I focused on building my income instead of trying to invest more. In the span of that 4 years, I did a total of 7 side hustles and only had 3 at the end of the 4 years. However, these 3 side hustle allowed me to build my income faster. Most importantly, my income was not tied to my hours.
These lead me to create HustleVentureSG to share more on how to achieve early financial independence. Unlike many other strategies that focus on investing every penny you have in the real estate and stock market. HustleVentureSG focuses on increasing a person’s networth by building multiple side hustles. Ultimately, the goal of the side hustle is to become a profitable business with free cash flow that would allow you to increase your net worth faster.
How to Calculate your Networth
The formula to calculate networth is:
Networth = Assets – Liabilities
Understanding the difference between an asset and a liability is critical to understanding how much you truly have. Assets should be investments that have stored value that is convertible to cash, be it stocks, art, real estate, or collectibles. Whereas a liability is something that takes money out from you. To reach financial independence, it is paramount for one to build their asset a whole lot greater than their liabilities.
How to Speed up your Networth
Before considering on increase your asset to reach financial independence, it is critical to understand the 7 levels to reach financial independence. That way, you will understand which stage of your investing journey you are at and how much more you need to grow your networth. So now, let’s look at how we can grow our networth fast starting from easiest to do to hardest.
Trimming expenses is something anyone can easily do right now. From cutting down your food cost, canceling subscriptions plan that you don’t use, consolidating debt, and most importantly, keeping track of your own spending habits. At the end of every month, tally up all expenses and classify them between needs and wants. You will come to a realization of how much you could actually save up and invest.
Jumping from job to job is actually one of the best way to increase a persons salary. On average, a person intending to switch their job should negiote a salary which is 10-15% above their current salary. According to statistic, the best time to jump to another more promising business is 2 years which gives the future employer a good gauge of your work entics. Switching jobs is a major decision and it is definitely not an easy choice. However, you need to know that:
When it feels scary to jump, that’s exactly when you jump. Otherwise you end up staying the same place your whole life. And that I can’t do.J. C. Chandor
Side Hustle, is one of the best way of increasing ones income and has no limit amount of income. There are many people that believe taking on a side hustle will take up too much time and may cause you to overwork. However, there are side hustles that do not require much time to maintain such as an e-comerce business or options trading.
The benefit of taking on a side hustle is that most do not require high upfront capital to start and is relatively easy to make money from the start. Depending on how professional you are, you may even make a substantial amount of money! If you are looking for a side hustle, be sure to check out our side hustle 101 where we share all kinds of side hustle people are doing to increase their income.
Negotiate for a Higher Salary
The average annual inflation is 2%. As of 2022, we are now facing record inflation with the US inflation at 9.1% and Singapore at 6.7%. To deal with inflation, having a salary that is able to keep up and grow faster than inflation is critical. This is one of the toughest ways to increase your income as having to prove your superior on your better performance is tough. Every working adult working as an employee has to prove that their 9-5 is better than one another. Ultimately, there is a limit to how much an employee can negotiate for his/her salary.
Knowing how to invest
Knowing how to properly invest is by far one of the most underrated skills to learn. Earning an extra 1% per annum can make a big difference when compounded annually. This is why every investor need to learn by themselves how they can invest on their own. I have seen many early investor putting their money into an ILPs( Investment-link policy), while they are able to give you a steady amount of return, I believe there is a better way for you to earn more. When you are invested by a fund manager, they absorb your returns for their own fees. As mentioned, every 1% in investment is important and your compound interest is losing more than just 1% per annum.
Learning to invest on your own using a brokeraging platform such as Tiger Broker or MooMoo can help you earn more tremendously. If you are young, having an good amount of investment in growth is great as you have a longer time horizon and should be able to stomach volatility. Ultimately, if you wish to make a substantial amount through investing, take the time to do an in depth research and analysis of a company before investing your money.
Why you should focus on building your networth as early as possible
Like how I did to achieve high networth early, I build my income and invested early. This allow me to reach a level of financial stability where I do have to worry about my finances for quite some time. At age 25, I am able to focus more on the things I truly enjoy such as writing blogs such as this!
Most financial advisor and FIRE movement focuses too heavily on the investing aspect to build a higher networth. The truth is that it is going to be way easier to increase your investment by increase your income. This is why the average millionaire has over 7 income sources, this allow them to never be overly dependent on one income source.
To conclude, Being overlying dependent on an employee income is a death trap that keeps you in the rat race. If you wish to increase your networth fast, the best way is to build multiple side hustle, turn some of them into a business and hopefully earn cash flow from there.