Building wealth from nothing seems unachievable for most people due to the widening wealth disparity between the rich and the poor.
According to a Wealth-X survey from 2019, 67.7% of the world’s ultra-wealthy population—those with $30 million or more in assets—were in fact self-made.
Even more intriguing is the sudden increase in this class of ultra-wealthy people. The number of ultra-wealthy people climbed from 265,490 in the 2019 report to 290,720 in the 2020 report, a nearly 10% increase.
The aforementioned data tells us two things: first, it’s possible to build wealth out of nothing; and second, it’s becoming more common for people to accomplish the seemingly impossible. Without further ado, let’s take a look at five ways to build wealth from nothing.
1. Educate yourself about money
Before we can effectively address any significant changes in our life, we always need to adjust our mindsets.
Spending time on your financial education is the first step to creating wealth from nothing. Learn key concepts, including return on investment, passive income, net worth, income, expenses, and financial freedom.
Follow blogs, read books, listen to podcasts and interviews, and enrol in courses, that discuss financial education.
According to magnate, Robert Kiyosaki, “Everyone has the ability to build a financial ark to survive and flourish in the future, but you must invest time in your financial education to build an ark with a solid foundation.”
2. Create a regular income source
Without a consistent source of income, it is difficult to build wealth from nothing. Without saving money, you cannot invest, and without a steady salary, you cannot save.
Multilevel marketing, Ponzi schemes, or gambling do not help people create lasting wealth.
The key to long-term wealth creation is value creation. It is genuinely impossible to achieve sustained wealth if you are not producing goods or services with intrinsic worth and generating revenue from them.
“All wealth comes from adding value…produce more, better, cheaper, faster, and easier than someone else,” said Brian Tracy, a self-development expert.
3. Have insurance
Insurance is a crucial expense that you should include in your budget. You can avoid suffering significant losses in the event of unfavourable occurrences by insuring yourself and your major assets –properties, vehicles, etc.
At the very least, obtain health insurance to protect your finances in the terrible case of a pricey illness.
Building wealth is nice, but losing it to unanticipated situations or occurrences will be agonising. Be prepared and protect what is most important to you by getting insurance.
“Buying insurance cannot change your life but it prevents your life from being changed… You will not turn bankrupt because of buying insurance but you will cause your loved ones to turn bankrupt if you don’t,” said Jack Ma, founder of Alibaba.
4. Passive income ideas
In addition to raising a revenue from your job or business, you should look into several passive income sources.
Contrary to your employment or business, passive income is revenue you create that does not depend on your ongoing presence or labour.
“If you don’t find a way to make money while you sleep, you will work until you die,” said Warren Buffett, the legendary investor, and CEO of Berkshire Hattaway.
5. Delay your gratifications
There are so many commercials around us that are designed to get us to buy stuff we do not need. The list is vast and includes the newest iPhone, automobiles, designer labels, and shoes.
Learn to wait till you are healthy enough before purchasing these items if you hope to become wealthy one day. This is doesn’t mean that you shouldn’t indulge in a few small comforts.
The “Financial Independence, Retire Early” (FIRE) movement advocates severe saving, which puts off your desires.
One of the FIRE movement’s pioneers, Jacob Lunk Fisker, developed and followed a plan that advised investing between 60% and 80% of one’s monthly salary. Fisker ultimately decided to retire at the age of 33 and now lives outside of Chicago on $7,000.