Increase My Net Worth | Let's Talk Money Goals

Hi, I'm Yaneli, also known as MissBeHelpful in New York City. My goal is to have a net worth of $250,000 or more. So, Yaneli, I know you know this, but for everybody watching at home, net worth is what you own minus what you owe. You might own things like bank accounts or retirement accounts and owe credit card debt, student loans, or a car loan. The number that you get at the end of your calculation could actually be positive or negative. So, Yaneli, how does your net worth compare now to what it was when you first started tracking it? One of the first things I learned was I was doing it all wrong because I was just focusing so much on how much money I had in my checking account. And so, yeah, I was paying off debt, like, little by little. I was making my minimum payments on my credit cards because I was just focused on that number in my bank account. And then I learned about net worth and I was like, I can't be focused on how much is in the bank. I have to focus on how much I'm worth, like, overall. And that's so much more important. If your net worth is negative because you're paying off debts, debt repayment plans can help you stay organized while you work toward a positive net worth. The interest that I had on my credit cards, it was like above 20% on my credit cards, like on average across the five credit cards that I owed money on. And so at that point, I realized, like, my net worth is actually decreasing every month when I just make a minimum payment on my credit card bills, even though my checking account or my savings account might be growing. You know, it's so easy to look on your phone and see how much money you have in your checking account, your savings account. But what you started to do was look at your full financial picture and realizing that one piece of the puzzle might make you look really healthy, financially speaking, but then you might have another piece of the puzzle you're ignoring and you're holding on to cash while making minimum payments on your debt. And that means that your debt is very expensive. Right. I mean, that was one of the main reasons that motivated me to learn about how to grow my net worth and led me to invest outside of my retirement accounts, because as a first generation American, I didn't really know a lot about investing in the stock market. And it was scary to me. And then so I was just focusing on, let me just fund my little 401k, just do that. That's, you know, my parents didn't have a 401k, so I'm lucky enough to just have that. But let me really focus on saving money, saving money because that's something that my parents couldn't really do, being that they had limited incomes. It's worth noting that your income is not included in a net worth calculation. You could bring home a big paycheck, but have a low net worth if your spending is higher. Now that I'm like, OK, I don't have a limited income, so let me figure out how to maximize the money that I'm making and really make it grow rather than just kind of hoarding it in a savings account or in a checking account, which I think is like, I don't know how much people are talking about this, but this is actually a really big problem that I noticed personally, you know, in my own community that a lot of my friends and family members will just have fat bank accounts with cash because they're afraid of losing the money. But I find that, you know, if you don't learn about risk, you could actually be hurting yourself from growing the net worth, which is, you know, again, it's just like it keeps fueling me to learn more about net worth because there's a lot of mistakes that you can make without really knowing. And I just want to make sure I'm not making any of those mistakes. Yeah, you know, I think you read a lot about, especially the millennial generation. I'm in my 30s as well. And as a generation, we've gone through so much economic uncertainty in 2008, 2009, and then in 2020. And so there is this impulse to hold on to the money you have because what you see in your bank account, it feels real. And then investing is scary. Net worth is just numbers, but there's a lot of emotion behind the numbers too. That's so true. You know, I find like every year around New Year's, that's generally when people have this New Year energy, right? Like this new, this momentum to like, yeah, I'm going to like get my net worth up or I'm going to start tracking my money. And so it's funny because I feel like that's great, right? But it's like you said, it's this constant reflection that you have to be doing about everything. And to me, like, that's really what net worth is. It's like, I have to constantly be thinking about everything that I'm doing with my money, not just my bank account, not just my 401k, right? Like not just my business, but all these pieces together at once. And it makes this puzzle. And that's what makes it hard because puzzles are complicated because there's so many pieces. Track your progress by recalculating your net worth a few times each year, around once per quarter. Over time, this will show you how far you've come. So given your age, you're already well ahead of the curve in terms of average net worth. For people under the age of 35, that average net worth is around $76,000 and you're already over $200,000. How did you come up with $250,000 as your goal in the first place? Yeah, it's a good question. So I have been reading a lot online about fire, the fire movement. And I was like, I don't know how realistic the fire movement is for me specifically because of the fact that I have a really big family. I have eight brothers and sisters, plus my mom and dad. And my parents don't have any retirement funds. They don't have anything for retirement. So it's pretty much on me and my brothers and sisters to take care of them. And my dad's already retired. That's really great that you're thinking about these things, not just about how much money you need to have so you can retire and feel secure financially, but also how much money you need to have to be able to care for your parents and other family members even after you stop working. I kind of figured, OK, fire might be pushing it, trying to do too much. And I'm already over 30. So I was like, OK, what if I could do one of the less aggressive versions? And I started reading about that, which was, for me, the one that interested me the most was coast fire, which means that you build up a nest egg to a certain amount. And then you don't have to invest anymore for years to come. And you will still be able to retire at the traditional retirement age of 65 with a million dollars or more. Yeah. And so for anybody watching at home who's wondering what FIRE is, that stands for Financial Independence Retire Early. And there are lots of different sub-techniques within there. But it's a way to basically save and invest as aggressively as you can while you are still working with the hopes that you won't be reliant on a steady paycheck anymore. And you'll be able to retire when you want instead of waiting until you hit a more traditional retirement age or even working well into what are typically considered retirement years. So Yaneli, it was so great to speak with you today. You should be really proud of yourself for everything that you accomplished in 2020. And I just know that 2021 is going to be the year that you hit that $250,000 net worth. Thank you, Sarah. I appreciate it. If increasing your net worth is one of your goals this year, start by calculating it. NerdWallet actually offers a net worth calculator that can make this a lot easier. Next, set a specific dollar amount as your goal. Maybe you want to increase your net worth by $5,000 or $15,000 or $25,000. If you have a number in mind, it makes it that much easier to track your progress.