How Average Earners Build Surprisingly High Net Worths

A high net worth gives you the freedom to live the life you want, from starting a business to retiring early to quitting a job you dislike without having another one lined up right away. If you’re not earning a sizable salary, though, a high net worth can feel out of reach.

The truth is that you don’t need a high income to have a high net worth. Your net worth, simply put, is your assets minus your liabilities— it’s not how much you earn, it’s how much you keep.

Here’s what you can do to raise your net worth, no matter your income.

Focus on Saving Consistently

With saving, slow and steady is the way to go. Try to make regular contributions, rather than sporadic ones. Start with an emergency fund: experts recommend saving three to six months of expenses. Park this money in a high-yield savings account. It will provide a competitive interest rate and FDIC protection. Plus, as a liquid asset, the money will be easily accessible in case you need it quickly.

If you’re committed to consistently setting aside a portion of your income toward savings goals, you may be surprised at just how quickly the money adds up—and you may be able to adapt your lifestyle to minimize your need for that cash.

Automate Money Moves and Pay Yourself First

When your paycheck hits your checking account, that money should have a job. Part of it should be redirected to your savings—that is, you should pay yourself first before you spend that money.

You might want to take advantage of tools to automate your money moves. Setting up an auto transfer of funds to a savings or investment account takes minutes and ensures consistency. You can also set up retirement contributions that are automatically deducted from your paycheck.

These simple—and yes, boring—approaches may outperform a more active strategy. They avoid the dangers (and the time commitment) of over-optimizing or constantly tinkering with a portfolio.

Avoid Lifestyle Creep

As you earn more, you may be tempted to spend more—and you though you may not notice it at first, that spending will add up. This lifestyle creep will slowly but surely slow down your progress. It even has the potential to diminish your net worth.

To combat lifestyle creep, take a good look at how you spend your money. To save as much as possible, you’ll want to keep your lifestyle as it is, even when you get a raise or a bonus. That’s not to say that you can’t celebrate. Just plan ahead, and strike a deal with yourself—say, you can spend 20% of your new funds, and save the rest.

Give Compounding Time to Do the Heavy Lifting

Try to start to save early and let your money grow. Compounding has long been the secret to building a high net worth, and the benefit for those without significant income is that it still works, even with small amounts. So put yourself on a long timeline.

This requires patience, of course. But taking a measured approach over a period of many years can help you avoid short-term performance chasing, which has the potential to erase progress.

It’s also crucial that you set realistic expectations for how quickly your net worth will increase. Get familiar with a compound interest calculator. This is a project that will last years or even decades, not months.