Your net worth says how well you have used your income to build assets and reduce liabilities. The strategy to build your net worth should focus on minimizing expenditures, creating an investible surplus to build and grow assets and paying down liabilities. Here are some measures that you can take to keep your net worth on an upward trajectory.
Guard against the unexpected
A dip in net worth may be due to a financial emergency that needed you to sell investments, break deposits or otherwise use up your assets. If the investments were sold or redeemed at a loss, then the impact was greater because more investments had to be liquidated to fund the emergency. Or, you may have decided to go with debt to tackle the emergency. This too increases liability and thus reduces the net worth.
Give the protection of an emergency fund to your net worth. With an emergency fund, neither would there a need to sell investments at a loss or even sell them, nor would there be any need to take on debt in an emergency. Use insurance to protect your resources. Take adequate health, personal accident, motor and other insurances, which are relevant to your needs.
