Build Wealth By Increasing Your Happiness and Your Net Worth

build wealth increase happiness

I have met lots of folks who believe that to build wealth they need to make a big salary- then it’s all good. Well, wake up, because it ain’t . Inflation and taxes are lurking and munching down on that salary each year so your whole net worth (meaning what you own) has to be going up to keep up. Some reasons it won’t:

You continue to spend more than you take in

You continue to pay interest only on your mortgage

You continue to not participate in deferred compensation plans

You continue to “play” the stock market and never make any real after tax after expenses profit.

You continue to plan vacations instead of planning to stop work or work part-time

You continue to support family members to the demise of your retirement plan or your children’s education.

You continue to borrow for cars, boats, etc.  that depreciate in value.

Your net worth which is everything you own minus your debt is what matters.  If you have no clue as to where the money is going –do this little exercise to find out. It isn’t super accurate but it will give you an idea of where the money is going.

Look at your form 1040 Line 7 –that is the amount of income that you earned for the year. Now subtract the number from line 61 which is the amount of tax withheld. That is the net amount that you lived on and then divide by 12 for the monthly amount that came into your household.

Now take the amount that you saved during the year and divide that by the net amount that you lived on for a percentage of the amount saved. That percentage should be 10-25%. If it is a negative then you are spending more than you are taking in and your net worth will go down.

Okay now for the positive. Keeping track of spending actually helps you build wealth but also grows how happy you are. When we track our spending and then spend it, we can develop a habit of gratitude (thankful for be able to take the family on a cruise) for what we have and also for what we accomplished (saving for a vacation or a child’s education). New studies are coming out that show being grateful forces people to overcome what psychologists call the negativity bias – the innate tendency to dwell on problems, annoyances, and injustices rather than upbeat events. Focusing on our blessings can help ward off depression and build resilience in times of stress, grief or disasters.

So as you take this journey to build wealth, take action to increase your net worth and consider what you have and be grateful for it.


  1. Melissa Moore on February 24, 2011 at 7:18 AM

    Dear Fern
    I am someone who needs some financial council currently and want to consult with you – I make a big salary and don’t have enough money – and i need some help. Are you the right person. Please advise. I need to go over the whole thing with someone and get it right – and need some council on a house I am underwater with- Please advise – or maybe you can direct me in a new way. Thanks Melissa Moore

  2. Fern on February 28, 2011 at 7:02 PM

    I have emailed you directly to set up a time to talk.

  3. Sam Jonson on June 26, 2012 at 4:03 PM

    Thank you for this.

  4. Fern Alix LaRocca on June 26, 2012 at 5:02 PM

    You are welcome!

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