Can you build wealth from nothing? You would probably say, only a magician can do it! The fact is that you can build wealth, literally from nothing.
Assuming you start off from a situation where you have no money in your account and also have debts to clear; it is still possible to build wealth from such a situation.
It is not easy and will not happen overnight. It is definitely possible to do it, with hard work and a systematic, disciplined approach. Let us discuss how this can be done.
- Believe in yourself
Self-belief is believing in your abilities and being confident about achieving success. This is extremely important. There are many strategies to create wealth from nothing, however, none of them involve luck. They all call for focused and dedicated effort and hours of toil. Without believing that you can do it, these strategies may not be useful. Be confident about your ability to put in the effort needed. Have a positive attitude that can help you when you come across obstacles. Building wealth from nothing is a tough job and you will encounter many obstacles in your way. Self-confidence and determination will help you to clear obstacles and achieve your goals.
- The formula is simple
The secret of creating wealth is simple. You need to save enough money year on year and invest this money so that its value increases. The formula is very simple, savings equals income minus expenses. The more income you earn, the more you can save. When you spend less, you can save more. The trick though is knowing how to earn more and spend less. Once you do that, then saving money becomes easy. Even if you start with no money, in a year’s time you can save some money, which can be the starting point of your journey to create wealth. Let us see how you can earn more and spend less.
- Earn a regular income that you can rely on
Assuming you start from scratch with nothing on hand; the first thing to do is start earning money. Get a job that can help you earn a regular monthly income. When you start off with nothing, you need a job that can help you earn money. If you wait for a job that will give you a huge income, you may have to wait for long. Start with something that will help you earn money and most importantly gain experience.
You can even work for less money or start work as an intern to learn on the job. Put in efforts on the job to learn. Work hard and perform well and the money will slowly start coming in. Hard work always yields results. When you prove yourself at work, you can get a higher salary. Once you gain experience, you can always look for another job that can help you earn more. There is no shortcut to success. You need to toil hard initially so that you can get a good income.
If you are not employed and are running a business, then you need to work even harder. The key here is to win the confidence of customers. When you start a business, big or small, you need to earn the trust of customers. You can give something extra or added value to the customer, so they become loyal to you. Once you have loyal customers, they will do the marketing for you and bring you more business. Earning money from a business would be easy when you offer something of value to customers.
- Invest in yourself so that your career takes off
If you want to increase your income, you should be a valuable asset for your employer. That will happen with self-improvement. Before you invest money to gain wealth, you need to first invest in yourself. Invest money and time to do these things:
- Acquire an additional qualification. Join a night school or a distance education program, where you can get an additional degree or diploma that will help you in your career.
- Learn skills. Apart from qualification, you need skills that help you excel at work. You can get skills by investing in training. Thanks to the growth of online training, you can undergo the training online in your free time.
- Get certified! For some jobs, you may need to be certified or clear certain tests. This will help in accelerating your career growth.
- Improve your personality. You can use the help of a coach or mentor to improve your overall personality. Good communication skills, a pleasant personality, and a confident approach can help you impress your superiors and customers.
When you invest in yourself, you are creating an opportunity to grow in your career. The more the effort you put in, the higher would be your career growth. This would also help you earn more.
- Try to earn additional income
When you have too many expenses or debts, then whatever you earn may not be sufficient. In such a situation, you need to try to earn an additional income. Apart from the job where you work or the business you run; you need to find options to earn extra money. You can consider taking up a part-time job in the evenings or nights so that you can earn more. You can also look at a freelance job that can help you earn money in your free time. The growth of the internet has opened up job opportunities online. There are many ways in which you can spend your spare time doing something productive so you can earn money.
- Be debt free
One of the major obstacles in wealth creation is debts. The loans you have taken are an obstacle in your road to becoming wealthy. Your top priority must be to clear all your debts. Once you put in effort and start earning well, use this money wisely. Clear your debts, so that you can stop paying interest. Clearing debts helps you save more money and that will help you in your quest to create wealth. Don’t worry even if you have a lot of debts, a disciplined approach can help you clear them and start afresh.
- Cut expenses to save more
One of the most important and difficult things to do is to cut expenses. The money you earn would be spent on taking care of your needs and wants. What you save is the difference between your earnings and expenses. As a thumb rule, one needs to save at least 15-20% of their income. However, if you are trying to create wealth from nothing, this is not enough. You may need to save at least 50% of your earnings so that you can have money in the bank that you can invest. The best way to do this is to drastically cut down your expenses. It’s tough, but not impossible.
List out all your essential expenses, like house rent/mortgage payment, clothing, transport, grocery, expenses on children, etc. These are your needs; they are essential you cannot do without them. It doesn’t mean that you can’t reduce these expenses. Here’s how it can be done:
- Try to move to a smaller home so you can save on rental expenses.
- Cut down on the expensive clothing. When you want to build wealth for your future, you need to be prepared for a few sacrifices.
- Get a cheaper vehicle, maybe a used one. You can even consider using public transport until you are financially strong to be able to afford a car.
- Look for discount shopping options, where you can save on grocery bills.
Once you take care of your needs, next come the wants. These are things you have to sacrifice if you are starting with nothing. You don’t need an iPhone when you can do the job with any smartphone. Similarly, with everything being online, do you need to spend money for a huge TV with cable? You can cut down visits to the cinemas and fancy restaurants to save money. All this is definitely tough, but the sacrifices you make for the initial few years will help you build wealth that you can enjoy later.
Cutting down your expenses will help you save more money. Make sure you use your credit cards wisely. Pay off the entire balance to avoid paying high interests. Look for a card that gives you low-interest credit and allows you benefits like reward points. You can encash these reward points to buy fuel and groceries.
- Start investing and do it wisely
Once you have done all the hard work, earned money, scrimped on expenses and cleared your debts; you would have started saving money. Your bank account that had nothing will now have something. Now start investing your savings to build wealth. This requires careful planning and a systematic approach. Just as you worked hard to earn money, you need to put in effort to understand various investment options. This is hard-earned money; you wouldn’t want to lose it. Investing wisely is essential so that you can build wealth through the money you have saved. Here is how you can go about doing it:
- The stock market is the one option that allows you to earn big from your savings. The stock market has its risks, but when you stay invested for a long-term, you can look forward to earning good returns. You can become a millionaire in 30 years if you invest 1000 every month in the stock market. If you can increase this amount to 6000, then you can accumulate a million in 10 years. This doesn’t mean that you invest everything in the stock market. Remember there is a risk involved, so don’t invest all that you have. You can have a systematic investment plan, where you invest a sum of money every month to buy stocks. Diversify your stock purchases by buying stocks from different types of company. If needed take the help of an investment advisor. If you are not comfortable buying stocks, then you can invest in a mutual fund. A professional fund manager would handle your money and use it to invest in stocks. The performance of the mutual fund can help you earn good returns. It has a lesser risk than directly investing in stocks.
- Invest money in safe investment options like bonds, securities, and bank deposits. You will earn lesser interest, but your capital amount is safe, unlike the stock market. A thumb rule is that you should invest a percent of your investments equal to your age in debt and the rest in equity (stock market or mutual funds). If you are 30 years old, invest 30% in debt and the remaining in equity. When you turn 40, reduce your equity investment by 10% and shift it to safer options.
- Make sure you follow a disciplined approach to investing. Invest regularly and invest every month. Don’t panic when the stock market crashes. What goes down will come up. Stay invested for a long term and you will definitely accumulate wealth. But you need to keep reviewing your investments. In case the company or mutual fund you have invested in doesn’t have good prospects, you can sell it and invest in something else. You need to do research and learn about the market.
- Real estate is yet another option to earn money. You would have an asset and can earn rent on it and sell it when its value goes up. Whether you invest in real estate or the stock market, do it only if you understand the market.
- Don’t empty your bank account when you start investing, keep three months of expenses as an emergency fund, you never know when you may need it.
Hard work, patience, and a commonsense approach can help you become rich even if you start from scratch.