![]() Interest on repayments is simply lost money. As much as possible, you should avoid taking out loans or accumulating high-interest debt (like on a credit card) and do your best to live within your means. Limit borrowing and tackle debt payments as soon as possible: “Debt is much easier to acquire than to extinguish,” Johnson says.While you should enjoy the fruits of your labor, you should also take income increases as an opportunity to save more and build wealth. It's very similar to net worth, except that it doesn't account for non-liquid assets such as real estate or retirement accounts. Manage spending even as your salary grows: Lifestyle creep is real, and it can be tempting to increase your spending as you make more money. Your liquid net worth is the amount of money you have in cash or cash equivalents (assets that can be easily converted into cash) after you've deducted all of your liabilities.So, make sure you contribute at least enough to your 401(k) to earn any match, and more if you can afford to. If your company offers a match program, it's giving you free money. Prioritize 401(k) contributions and take advantage of your company match, if available: Since 401(k) contributions are pretax, they're a great way to save your money and build wealth over time.Plus, the younger you are, the more time you have to make up for any losses. Unfortunately, many people are overly conservative with their asset allocation, particularly in their retirement accounts," Johnson says. For your most liquid assets, such as cash and balances. Financial assets are considered liquid, as people can typically sell them easily. Don’t be afraid to take risks, especially if you’re younger: "Counterintuitively, the biggest mistake many people make in investing is not taking enough risk. Liquid net worth is the difference between what you could quickly get for your assets and what you owe. Many people rely on stocks, bonds and mutual funds for savings and investments.
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