To build wealth from nothing seems like an impossible thing to do.
It seems too good to be true and it can’t be done.
It only seems that way because you’re already thinking about the end goal when instead, you should actually be FOCUSING ON THE JOURNEY! ?
The journey and the decisions we make along the way are important variables to achieving wealth.
The three things that will be mentioned below are the things that you should focus on to build and accumulate wealth over time.
These are simple strategies that were mentioned by wealthy people and different financial authors on how they were able to acquire money and compound them.
I’m not going to lie, if you’re new to managing your finances, this can feel overwhelming but it’s totally doable.
You just need to take some time, learn, and digest all the info.
Now, if you’re ready to follow the rich, then read ‘til the end! ?
3 Actions To Focus On To Build Wealth From Nothing
In wealth building, it just revolves around three main things in your life:
1. Earning more money
2. Spending less
3. Investing wisely
If you earn more money and control your spending, it’s guaranteed that you’ll be able to save more money.
But saving isn’t just the main goal here, we should aim to compound that saved money and grow it – that’s where investing comes in.
To start off this article let’s talk about first on how to earn more money:
Earning More Money
1. Solve A Problem
One sure way to build wealth from nothing would be solving a problem.
Don’t think about a problem that only a few people have, think about a problem that’s experienced globally!
Now in order to this, it might take years and you probably can’t do it alone – you need a team.
Think about the big companies that were started in the year 2000s!
Just think about what Uber solved – they solved the hassle of finding a cab within a busy city. On top of that, they found a way for people to save time – which is a scarce “asset” for many.
Facebook, LinkedIn, and Twitter made social networking easier. With just a click of a button, you get to see what other people are up to, what their hobbies are, what they like, and where they’ve been.
Airbnb solved the problem of paying expensive bills to hotels. They provided rooms, apartments, and condo units without having going over the hassle of finding rooms to rent, signing papers, and paying expensive amounts for a single overnight stay.
These companies have become a global presence because they solved problems that are experienced by many people around the world.
They didn’t limit their vision in states only, they expanded where more consumers can have access to them.
A show like SharkTank is where you see entrepreneurs solving different problems. It’s quite entertaining to watch because you also get ideas from it?
If you have the time, I really suggest that you watch this short video from James Jani.
When I watched it, it was like I was watching a movie. The video also talks about how to build wealth from nothing. Tell me your thoughts below after you’ve watched the video! 🙂
2. Boost Your Salary
If you’re able to build a higher salary compared to your daily expense then it’s only natural that you’ll be able to keep more money.
So how do you increase your salary? There are three ways to do this:
a) Ask for a raise
If you think you’re being underpaid in your job or you’ve been on the same payroll but the demands on your job has increased, then it’s probably time to ask for a raise.
According to Indeed.com, they said that other than preparing what to say before asking for a raise, you need to gauge how the company is doing.
If the company is losing money in this pandemic, then probably asking for a raise today isn’t a good time. Your boss is probably focused on how to keep the company running and staying competitive.
When asking for a raise, it should be in a closed-door, it shouldn’t be when you’re taking lunch with your boss or talking to him in the hallway. Set an appointment first.
And lastly, prepare to answer questions. Getting approved for a raise isn’t done immediately. Your boss and probably the HR will take a look at your performance, what have you contributed to the company, and what makes you deserve this raise.
I would recommend going over Ramit Sethi’s briefcase technique videos on YouTube before setting that appointment with your boss 🙂
b) Get a second job
Getting a second job allows you to increase your take-home salary every month. But in order to achieve a second job, you also need to give up more time within the day.
I told you, acquiring wealth isn’t a walk in the park…
With having a second job, you put your “resting time” into something that makes you earn more money.
You can apply for a second job to different businesses in your neighborhood or you can work from home!
I’ve mentioned before that the internet has given us multiple opportunities to make money.
In my post, 6 Best Online Jobs From Home, I’ve listed the best and famous online jobs that you can do.
Although I’ve tried all of those except for numbers 2 and 3, my favorite on that list would be number 6 – Digital Marketing!
Not only is it the popular job out there right now, but it’s also always in demand since more entrepreneurs are taking their businesses online.
c) Switch jobs to get better pay
When switching jobs make sure that you already have a plan in mind. Don’t resign and not know what you’ll do next.
While you’re still working, scout for your next job and study more about the industry that you’re planning to enter. Ask questions like is the industry strong? Was it affected by the recent pandemic? You need to answer this because you don’t want to be hired in a company that’s on the brink of bankruptcy.
After you’ve done your research it’s time to set up your profile to make it as professional as possible.
In my article on How To Switch Jobs To Get Better Pay, I’ve written a section on what are the must-do’s when it comes to your LinkedIn profile.
I’ve also added tips on negotiating and what to answer when they ask for your desired salary.
But before you go to the negotiating part, make sure you know the industry, the company that you’re applying to, and the job that you’re trying to get.
Practice the interview, try answerings possible questions that will be thrown at you.
3. Secure A Job
If you’re really starting from scratch with zero money, then getting a job is an excellent start.
Getting paid hourly is a good way to start building some cash. That’s what our grandparents and parents did and that can be your path as well.
But understand if it’s your first time working, you won’t get a high salary job immediately. And that’s okay. Anything worth having doesn’t come easy. Work your way to that your dream salary, get experience and learn from people.
Do your very best every day at work.
If you think there’s something you don’t know and it involves your field of work, there are a lot of resources on the internet!
There are free online courses as well! You’ll never know when you can use that skill but it’s important to have that in your arsenal.
Getting a job nowadays is sometimes not a route that people will take because we’re living in a world that entrepreneurship is glorified.
But there are several benefits for being employed – you have medical insurance, you have a retirement fund, employee discounts, a stable source of income, monthly and yearly bonuses!
So I’m telling you, securing a job is an excellent way to acquire money.
But your story doesn’t need to stop with you being an employee all your life, you can use those savings to fund your business idea in the future! (if this is something you’re looking forward to)
4. Start That Business
It’s true what they say that nobody got rich working in a 9-5.
I’d like to think that even if you get very high pay in your 9-5, you’re still not rich with your time – which to me is equally important.
That’s why I mentioned above that your story shouldn’t end on you being an employee – save up and start that business.
What you can do is although you’ve saved up money to start the business, you can still keep your day job unless your business really requires more time and effort from you.
It’s ideal to do this because at first, your business won’t generate money and in order to keep your business running and feed yourself at the same time, you need to have your day job to get that monthly salary.
Here are 20+ Business Ideas in 2020 that Oberlo thinks will make you money this year! They’ve written a number out of the box business ideas that you might be interested in.
If you don’t have a business in mind yet and you want to earn a little bit on the side, you can check out my post on different ways to make money from home.
I have listed 12 ways on how to just do that. And probably the simplest way to earn money on the side is number 1 on that list! 😉
5. Sell Old Belongings
I’m sure you have things in your house that you barely use anymore. From clothes to furniture to gadgets. Instead of those things just collecting dust, it’s time to convert them to cash!
The way I decide which clothes to sell would be if I haven’t worn it for 3 months already, then I sell them.
For gadgets, make sure that they still work before you sell them to others. And lastly, with furniture, there are tons of buyers for this stuff because everyone loves decorating and redecorating their homes.
I find that Facebook Marketplace is one of the best platforms to sell your things, just based on the size of Facebook’s user base.
6. Start A Side Hustle
With the use of the internet and modern technology, it’s easier to do side hustles now compared to before. Although it’s easier to set up now, the hard work and perseverance have never changed.
In this article by Investment U, they listed several side hustles that you can do this 2020.
It was quite fun for me to read, it was like going through memory lane…
In that article, they listed being an Airbnb host, social media manager, being an affiliate marketer, and being an Uber driver.
You know how much you love to make money when you’ve done half of the things on that list?
I’ve been an uber driver, a social media manager, a current affiliate marketer, and once managed an Airbnb-like house.
And having experience on all of those things made me realize that you might have more money coming into your account but if you don’t know have conscious spending, all efforts are just wasted.
Saving money to build wealth is a no brainer.
And how do we save money? In a perfect world, it’s acquiring money and not spending it.
But in reality, that’s not the case. We all have daily expenses like food, water, and transportation. We also have monthly bills like phone bills, groceries, shelter, electricity, clothes, and essential things.
How come these are the only important things but to some people, it’s so hard for them to live below their means? They always use up their take-home salary and not being able to save.
So in this section of the article, I’ll be discussing the different ways on how you can lower your expenses to boost your savings. 🙂
1. Track Your Expenses
If you’re sick of living paycheck to paycheck without having any savings, expense tracking is the solution for that.
Tracking where your money goes allows you to see where you overspent that month or week.
I use Google Sheet to track my expense because it’s convenient for me – I just input what I purchased using my phone.
If you’d like to get the exact template I use to do this, grab my FREE Yearly Budgeting Template below:
You can also read TheBalance’s Best Expense Tracker Apps for 2020 for more applications to help you with this process.
Expense tracking can reveal a lot about your spending habits. Most of us forget where our budget for the week went. Sometimes we’re just dumbfounded on where we spent our money…
This process makes you know how much should you allocate to things daily, weekly, or monthly.
2. Make A Budget
Making a budget and sticking to it makes you see the bigger picture of where you should spend your money.
When I lived on a budget, it was hard for me at first because it was something new to me. I had to change my usual spending and commit to it to see results.
The same thing would happen to you too. You will see it as a challenge at first but as days and week go, you’ll be accustomed to it.
Here are steps on how to make a budget:
1st step: Determine your why
You should know why you’re doing this – Is it for a better future? To pay off debt? To buy something?
Knowing your why is what will push you to continue sticking to your budget. It might sound “corny” but knowing my why is what anchored me to follow the budget list.
2nd step: Calculate your take-home money
Your take-home money is your salary minus all taxes and deductions. Your budget will revolve around that money.
You will make adjustments from time to time with that amount as your basis.
3rd step: Track your expenses
As mentioned above, knowing your expenses will help you determine where you’ve overspent that month or week.
You can’t find a solution if you don’t know where the problem is. You want to go to the root of the issue and know for yourself why you’ve overspent on that thing.
So track down all your expenses – list them down, put it on an app or phone.
4th step: Know your needs and wants
In this step, you determine what’s essential to you and what isn’t.
If you live on a strict budget, you’ll have more savings but it would be difficult to follow.
What I prefer for you to do is to have a not-so strict budget :p This budget allows you to spend on your wants but only for a certain amount and quantity.
Let’s say you eat out every week with your friends and you’ve found out you’re spending $300 every week every time you dine out.
A strict budget will tell you to completely cut off that activity. But a not-so strict budget will allow you to eat out but with max spending of $125-$175. You still get to eat out but not as often though?
5th step: Follow the budget
Following the budget would be the hardest part of the process for me.
For a few days, you will overspend and go beyond your budget. What you need to do is go back to the drawing board and adjust your budget again. After that, you try it out until you’re able to follow the budget weekly.
Living on a budget might seem too much of a hassle but it ensures you that you will always have enough money because of increased savings.
Having a budget and following it lets you avoid the pitfall of owing debt to someone and being in credit card debt.
Again, if you want to have a FREE yearly budget template, you can sign up here and I’ll send you one immediately!
3. Live A Frugal Lifestyle
To live frugally means being smart with your money. The two money saving strategies above are part of a frugal lifestyle.
When you’re living frugally, it means that you’re spending money intentionally. You’re not buying things to impress others or to show off – you’re buying things because of the simple reason that you need it.
Frugal people plan their finances. They set goals and create strategies on how to achieve them.
They take time to look at their expense sheet, adjusting their budget, and thinking about how they can improve their spending habits.
In my post on how to live a frugal lifestyle, I mentioned how I wish I would’ve noticed much earlier on that I was spending $200 on lunch meals every week – yep every week!
When I realized such a habit, I made an action plan about it. I searched for budget-friendly meals and packed lunch to the office!
And it didn’t stop there, sometimes I can’t function well without my coffee (yes, I need my morning coffee), so instead of buying coffee daily, I made my own! 🙂
Living frugally doesn’t mean that you’re stopping yourself from enjoying things but instead, it can be a new activity for you.
Not only are you trying something new but it’s much more satisfying to do these things knowing you’re doing it for a goal!
4. Personal Money Management
All the things mentioned under the Spend Less section are all under the personal money management umbrella.
Personal money management is the process of balancing one’s wealth and income with different needs wants and desires to reach a financial goal.
This is a financial subject that most people fail figuratively.
Data shows that on average, each household carries a credit card debt of $8,398! And if you total the US consumer debt it’s estimated at $13.86 Trillion.
How can people reach their financial goals if they’re drowning in debt? I understand if you temporarily have credit card debt because you swiped it to purchase something.
But what’s mind-boggling is people overuse their credit cards which leaves them to be in big debts.
I want to help out readers because I was once in debt too. It was honestly giving me anxiety and difficulty sleeping.
And I’m sure I’m not the only one.
So I decided to write a post on personal money management. I’ve written down tips and strategies so you can avoid being in debt and even get out of it!
Now that we’ve discussed on how to earn more money and how to save it and manage it properly, it’s time to know how we can compound it!
With every financial book you’ve read, almost all of those authors have suggested to invest your money.
Even interviews with famous rich people mentioned that you should invest a certain percentage of your money.
Which made me ask the question, why? why is investing always part of the equation when building wealth?
So I did my research and found the different benefits of investing & why you CAN’T run away from it:
a) To beat inflation
Inflation is the increase in prices of goods and services that happens yearly.
This means your $200 three years ago can buy you groceries good for two months already. But if you have a budget of $200 right now for a grocery trip, it will only last you two weeks or a month at best.
If you don’t put your money into something that’s not growing, the value of your money goes down.
Why? Because if your money stays stagnant and inflation is happening every year, the quantity of things that you can buy with that amount lessens.
If the average annual inflation rate is at 2% and you’re investing your money in something that’s giving a 7% return on investment per year, then you’re beating inflation!
b) Participate in the economy’s growth
If you invest in the stock market, you’re part of your country’s growth. You will be rewarded with monetary gains and dividends.
c) Passive Income
Passive income is what all of us desire, working with less effort but earning big.
Investing does that in a way.
While we’re working on our day job, our investment can grow on the side and earn as well.
You’re not working for that investment, but you’re letting the money work for you.
Since we’ve mentioned the three major benefits that investing gives us, it’s time to know where we should invest our money!
1. Invest In The Stock Market
Investing in the stock market makes you part of the growth of companies listed there.
As an investor and shareholder, you benefit when the company earns money and expands its business.
There are two ways to earn money in the stock market:
1. Capital appreciation – If you buy a stock that’s valued at $1 per share, and you bought $5,000 worth of shares, if the stock price increases to $1.20 in the same week, your investment would have seen a growth of more or less 20%!
2. Dividends – An investor can get dividends if the company decides to distribute a portion of their earnings. Companies need to decide on this because they also have another option to reinvest those earnings back to the company.
To know more about how the stock market works, you can have a look at my article about that.
2. Invest In Bonds
Bonds are used by companies and governments to fund their projects. An investor gets a bond and in return, the investor receives his capital with interest coming from the concerned institution.
People choose to invest in bonds compared to the stock market because there’s less volatility involved. That’s why they see bonds as “safer” investments.
3. Invest In Real Estate
Buying an apartment or condo unit and having it to be rented out is a popular way of investing in real estate.
Since more and more people want to live in the city because of their job or it’s near to everything they need, they’re looking for a place that can allow them to have access to those places.
Plus, they’re not looking for houses, they’re only looking for a single unit because it’s cost-effective and it’s much easier for them if they decide to move out.
If you want to know more about the real estate space, check out Graham Stephan’s Youtube Channel – he’s a real estate agent who’s giving out valuable tips and tricks about the industry.
4. Invest In Mutual Funds
If you want to rid the hassle of studying a company, learning how to read financial statements, and understanding charts, you can choose to invest in a mutual fund instead.
Being invested in a mutual fund allows you to have diversity and there’s a fund manager who’s going to make the decision on what to buy for that fund.
Basically you just invest your money there and let the investment team do all the nitty-gritty.
You can read the Best Mutual Fund in 2020 for NerdWallet here.
5. Invest In An Index Fund
Investing in an index fund allows you to directly just invest in an index. A stock market index mimics the movement of top companies in the stock market.
An index fund usually generates the same results of the index that it follows.
As I mentioned before, I suggest investing in an index fund that’s handled by the Vanguard group!
These are the most common investment vehicles that you can place your money in to see them grow. It’s important to note that it requires some time to see your money grow.
Mindset for building wealth
When building wealth, you should throw immediately the mentality of getting rich quickly.
Most rich people didn’t have that wealth overnight, it took them years and even decades to build it.
That’s how you should think as well. Always have that in the back of your mind – that what you’re doing now will make you be in a better financial place tomorrow.
Let me know what’s your favorite point above!