Ten ways to increase your net worth

Do you live a paycheck-to-paycheck existence? Or are you focused on escaping that vicious cycle and building your net worth?

Net worth — the value of all our assets like bank accounts and property minus our liabilities like mortgages and credit card debt — is a summary of our economic worth, the simplest indicator of our financial well-being.

Building your net worth is the path to true financial freedom, and there's a tried-and-true formula to grow it: Boost your income and assets while reducing your liabilities. In other words, save more money, and lower your debt. But doing so is often easier said than done.

So, let's examine 10 simple things you can try in order to start building a stronger net worth — and financial future — today.

1. Get a Raise

The most straightforward way to increase your net worth is to increase your income. If you've been at a company for some time and feel like you have done good work, there is no harm in asking for a reasonable increase in pay. You can raise the possibility before your annual review, and come armed with evidence of your value to the organization. There's not much downside to asking for more money as long as the request is reasonable and made professionally.

2. Find New Sources of Income

Money doesn't have to come from just your day job. You can increase your income by getting a second job, taking on freelance work, selling handmade birdhouses, or selling items on eBay. The opportunities are endless, and limited only by your own energy and time. Think of what a few thousand or even just a few hundred dollars a year might do to your bank account.

3. Buy a House

Renting is not helping your net worth because it's just money out with nothing left to show for it. By purchasing a home, any mortgage payments will go toward building equity, the value of which can increase if your house appreciates in value. And there's the potential to get all that money back — and more — if you choose to sell. You may have to take on debt to buy a home, so your net worth may not increase right away. (The more more you put down, the less debt you incur.) And as we all learned from the Great Recession, homes can also decline in value, usually only temporarily. But it will almost surely pay off in the long run, as long as you can make your mortgage payments.

4. Spend Less

Your net worth won't rise if cash is leaving your wallet. This is especially true if you are spending it on items that lose value or have no cash value at all. Decreasing your spending will help you save more, thus leaving additional cash for investments that can truly expand your overall net worth.

5. Get Out of Debt

Increasing your net worth isn't just about accumulating money, but reducing or eliminating what you owe to others. Credit card debt, student loans, car loans, and mortgages all count against you when it comes to calculating net worth. You should work hard to eliminate student loan debt, which can't be discharged in bankruptcy, and focus on paying off debt with the highest interest rates first (such as high APR credit cards).

6. Invest in Stocks

Don't let extra money just sit around fruitlessly. Make it work for you by investing in index funds or blue chip stocks that have a long history of growth. A typical return from the S&P 500 will net you an average of 7% growth annually. There is almost no easier way to boost net worth than through long-term investing of this nature.

7. Hit Your Company's 401K Match

If you work for a company that offers a 401K or similar retirement plan, there's a good chance it will match your contributions up to a certain percentage. In other words, it's free money just for participating. Most companies match somewhere around 3% of contributions, but many match even more. Remember that all money you contribute to a 401K is deducted from your taxable income.

8. Open a Roth IRA

This is another retirement account that works like a 401K, but in reverse. You invest money that has already been taxed into the account and can watch it grow, tax-free, until retirement. Many investment advisers suggest having both a 401K and a Roth IRA so you can take advantage of both tax benefits. You can contribute up to $5,500 annually into a Roth IRA, and $6,500 if you are over 60.

9. Get Married

Marriage has many benefits, including financial ones. For one thing, there are some nice tax advantages. And if you have a dual income household, your overall net worth can increase because you are combining assets, in a sense. In most cases, what's yours is hers and what's hers is yours. This gives you more buying power for investing and for buying a home, which can increase your net worth even further.

10. Buy Insurance

Your net worth could drop precipitously if you have an emergency and aren't protected. Are your house, car, and valuables properly insured? Do you have proper liability coverage? Good insurance may cost you some money in premiums, but you may save thousands of dollars by avoiding major repair expenses or legal bills.

This article first appeared at Wise Bread.