Daily Dupaco

Tuesday, March 29, 2011

Three ways to grow your net worth

It probably comes as little surprise in a challenging economy, but the typical American is feeling more financially squeezed.

The average U.S. family's household net worth declined 23 percent between 2007 and 2009, according to the Federal Reserve. (CNNMoney)

"Surveying the Aftermath of the Storm," a survey tracking the effects of the recession, shows the median net worth of households dropped from $125,000 to $96,000 over the period.

"Americans generally are doing what needs to be done. The big ones - the stock market and the value of our homes - we just can't control," said Matt Dodds, Dupaco Community Credit Union senior vice president, consumer lending. "But there are still things we need to be doing with our balance sheets."

Dodds offers three ways to positively control your net worth:

  1. Save more. It has to be automatic, systematic and happen without you thinking about it. Set up a separate savings account at your financial institution, over and above an employer 401(k). Direct a portion of each paycheck to automatically be deposited there.
  2. Pay down your debt quicker. Talk to your financial institution to find out whether there are cheaper ways to service your debt. Minimizing your interest expense with better rates is one way to do that.
  3. Learn from the past. "In the past, prior to 2007, any personal financial study would show you that people were relying on home values increasing exponentially as their only form of net worth," Dodds said. "What we've learned from this downturn is that it can only be part of the equation."

By Emily Kittle

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