Learning how to build wealth from nothing can feel like an impossible dream, especially if you believe wealth is only inherited or accessible to the well-connected. However, the reality is more encouraging. A 2019 report by Wealth-X revealed that a significant 67.7% of the world’s ultra-wealthy individuals – those with assets exceeding $30 million – are actually self-made. This trend is not slowing down; in fact, the number of ultra-rich individuals increased by almost 10% between 2019 and 2020, demonstrating that building wealth from the ground up is increasingly achievable.
Instead of dwelling on fantasies of inherited riches, it’s time to explore the actionable paths you can take to learn How Do You Get Rich With No Money. This article will guide you through ten concrete steps you can implement today to start building wealth and move towards a more financially independent life.
- Boost Your Financial Literacy
- Secure a Reliable Income Stream
- Master Budgeting
- Strategically Utilize Insurance
- Embrace Extreme Saving
- Establish an Emergency Fund
- Invest in Your Skills
- Explore Passive Income Streams
- Adopt Passive Investing
- Leverage a Robo-Advisor
Before diving in, remember the critical distinction highlighted by T. Harv Eker, author of Secrets of the Millionaire Mind: “Rich people are committed to being rich,” while “poor people want to be rich.” This difference between commitment and mere desire is fundamental and the first shift you need to make on your journey to wealth.
1. Boost Your Financial Literacy
Transforming your financial situation begins with transforming your mindset. Robert Kiyosaki, author of Rich Dad Poor Dad, wisely stated, “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.”
Therefore, your initial step in learning how do you get rich with no money is to dedicate time to financial education. Familiarize yourself with essential financial terms and concepts such as income, expenses, net worth, return on investment, passive income, and financial independence.
Engage with various learning resources. Read books on personal finance, listen to podcasts and interviews with financial experts, enroll in online courses, and follow reputable financial education blogs, like Money-Central.com.
Remember, financial education is an ongoing process. The financial landscape is constantly evolving, so continuous learning is crucial. However, be discerning about your sources. The digital age provides vast amounts of financial information, but not all of it is accurate or reliable. Focus on reputable sources that offer genuine insights and guidance from successful investors, business leaders, and certified financial advisors.
2. Secure a Reliable Income Stream
Building wealth from nothing is practically impossible without a consistent source of income. Saving money, a cornerstone of wealth building, requires income. Sustainable wealth isn’t built on shaky foundations like get-rich-quick schemes, pyramid schemes, or gambling.
Ignore the allure of overnight riches promised by those promoting schemes that promise wealth for minimal effort. Sustainable wealth is the result of long-term value creation. If you aren’t generating intrinsic value through a product or service, building lasting wealth is highly improbable.
If you’re seeking to learn how do you get rich with no money, your first priority should be securing a stable job if you don’t have one. If you are employed, focus on excelling in your role and ensuring job security.
For small business owners, the focus should remain on creating and enhancing long-term value. As self-development expert Brian Tracy noted, “All wealth comes from adding value,” which involves developing a business model that delivers products or services that are “more, better, cheaper, faster, and easier than someone else.”
3. Master Budgeting
Creating and adhering to a budget is a critical step in learning how do you get rich with no money. With a regular income secured, the next step is to create a budget to gain control over your spending habits. Budgets are typically structured on a monthly basis and serve as your financial roadmap.
A budget is essentially a financial blueprint for a specific period, outlining your projected income and anticipated expenditures. Every individual and household needs a monthly budget to clearly understand income and spending. Operating without a budget is akin to sailing without a compass – you’re likely to get lost in a sea of financial missteps.
A widely recommended budgeting method is the 50/30/20 rule. This approach suggests allocating 50% of your income to essential needs (housing, food, healthcare, transportation), 30% to discretionary wants (entertainment, dining out, hobbies, travel), and 20% to financial priorities (savings, investments, debt repayment).
50 30 20 budget rule example
Budgeting is crucial for several reasons. Primarily, it provides clarity on where your money is going, making it easier to identify areas where you can cut back. The lower your expenses, the more you can allocate towards savings and investments. By identifying and eliminating unnecessary spending, you accelerate your wealth-building journey. It’s that straightforward.
4. Strategically Utilize Insurance
Insurance is a vital component of a sound financial plan and should be a line item in your budget. Insuring yourself and your valuable assets (home, vehicle, etc.) protects you from potentially devastating financial losses due to unforeseen events.
At a minimum, health insurance is essential to prevent medical emergencies from depleting your savings. If you don’t have health coverage, research and compare health insurance options to find a plan that suits your needs and budget.
If you own a home and a car, consider homeowner’s and auto insurance. Furthermore, if you have dependents, term life insurance is a responsible consideration.
Building wealth is important, but preserving it is equally crucial. Insurance acts as a safety net, preventing unforeseen events from wiping out your hard-earned wealth. Be proactive and insure against potential major losses.
However, avoid over-insuring. Many insurance products offer limited value. Stick to essential insurance types unless there’s a compelling reason to acquire more specialized coverage.
As Jack Ma, founder of Alibaba, wisely said, “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.”
5. Embrace Extreme Saving
While the 50/30/20 rule is a solid starting point, you can significantly increase your savings rate with focused effort. Once you are truly committed to how do you get rich with no money, you’ll discover numerous areas in your budget where you can reduce spending or eliminate costs entirely. Many communities advocate for and practice “extreme” saving strategies.
The Financial Independence, Retire Early (FIRE) movement is a prominent example. FIRE proponents advocate for aggressive saving strategies, often aiming to save a substantial percentage of their monthly income.
Jacob Lund Fisker, a founder of the FIRE movement, famously practiced saving and investing 60% to 80% of his monthly income. He achieved early retirement at age 33 and now lives comfortably on a modest annual budget.
Fisker and other FIRE advocates have cultivated large communities based on their successful experiments in drastically reducing expenses and challenging consumerism. They often prioritize DIY solutions, such as making their own bread or furniture, finding greater satisfaction in self-sufficiency than in consumer purchases.
While saving 60% to 80% of your income might seem ambitious initially, it demonstrates the significant potential for expense reduction that many people haven’t yet explored.
Here are some practical ways to cut expenses and increase savings:
- Prioritize cooking at home and buying groceries in bulk.
- Reduce dining out and utilize discounts on food delivery apps.
- Adjust your thermostat by a degree to lower utility bills.
- Opt for free or low-cost workout programs.
- Purchase big-ticket items like electronics during sales events.
- If rent exceeds 30% (or the more aggressive 10-15% FIRE target) of your income, renegotiate your lease or seek more affordable housing.
- Explore refinancing options to lower your mortgage interest rate.
Apply these strategies to boost your investable cash flow beyond the standard 20% of your income. Remember, it’s not about how much you earn, but how much you keep.
If you perceive frugality as restrictive, consider Jeff Bezos’ perspective: “I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.”
6. Establish an Emergency Fund
Having learned to save a significant portion of your income, the next crucial step in how do you get rich with no money is building an emergency fund. An emergency fund is essentially self-insurance – money set aside to cover unexpected expenses like car repairs or job loss.
Unexpected expenses and emergencies can lead to detrimental financial decisions: incurring debt or selling investments. Debt comes with interest payments, and selling investments prematurely means losing both the principal and potential future returns.
To avoid these scenarios, prioritize building an emergency fund. Aim to save three to six months’ worth of living expenses. Keep these funds in a readily accessible savings account.
Like insurance, an emergency fund won’t directly make you wealthy, but it acts as a financial shield, preventing you from disrupting your long-term wealth-building strategy during unforeseen circumstances.
7. Invest in Your Skills
There are two primary ways to increase your savings and investments: decrease expenses or increase income. While many financial guides focus on expense reduction, income growth is equally vital in learning how do you get rich with no money.
If you are employed, continuously improve your skillset through professional development courses and ongoing learning. Enhancing your skills, both hard and soft, increases your value in the job market, leading to promotions or better job opportunities and, consequently, higher income.
If you own a business, focus on deepening your market understanding, investing in innovation, and enhancing the value you provide to your customers. These efforts can expand your market share and boost revenue.
8. Explore Passive Income Streams
Complementing income from your job or business with passive income streams is a powerful strategy in how do you get rich with no money. Passive income is income generated with minimal ongoing effort, unlike active income from employment or self-employment.
Passive income is essential for those seeking financial independence. As Warren Buffett famously said, “If you don’t find a way to make money while you sleep, you will work until you die.”
There are two main types of passive income: investment passive income (where your money works for you) and non-investment passive income (where you invest some initial effort). This section focuses on non-investment passive income, as investment passive income is covered in the next section.
In today’s digital and global economy, numerous opportunities exist to earn income on the side. However, be cautious of get-rich-quick schemes like pyramid schemes and high-risk gambling platforms.
Reliable passive income ideas include:
- Selling Digital Products: If you possess expertise in a specific niche, create digital products like e-books, video courses, or online workshops. Digital products require upfront creation but can generate income for extended periods with minimal maintenance.
- Blogging: Share your expertise through regular blog posts. Once you build a substantial audience, you can monetize your blog through advertising (like Google AdSense), digital product sales, membership programs, sponsored content, and affiliate marketing.
- Affiliate Marketing: Promote other companies’ products on your platform and earn a commission on each sale generated through your unique referral links. This eliminates the need to create your own products.
- Dropshipping: Sell products from various suppliers without holding any inventory yourself. When a customer orders through your store, you forward the order to the supplier, who then ships the product directly to the customer. Your profit is the difference between the retail price and the wholesale price.
9. Adopt Passive Investing
To truly build wealth and learn how do you get rich with no money, you must save and then invest. If you’ve followed the previous steps, you’re now saving a significant portion of your income and potentially generating additional income through side hustles. Now is the time to invest seriously.
Virtually all self-made millionaires have built their wealth through prudent and profitable investments, often in the stock market. If you rely solely on your own labor, your earning potential is limited, and you can’t earn while you sleep.
Investing your money in the market allows your money to work for you, generating returns and potentially outpacing inflation.
So, what are the most effective ways to transform your savings into sustainable wealth?
Firstly, keeping your money solely in a savings account is not investing. Savings accounts are primarily for your emergency fund and short-term savings goals. Beyond that, your money should be in investments that offer higher returns while managing risk. Savings accounts typically offer low-interest rates, often below the rate of inflation, causing your savings to lose purchasing power over time.
Secondly, market timing, attempting to predict market highs and lows, is generally not a successful long-term strategy. Adopting a long-term investment perspective is more effective than trying to chase short-term market fluctuations. Historically, the stock market has risen more often than it has fallen, rewarding long-term investors.
As Peter Lynch, a renowned investment manager, stated, “More people lose money waiting for corrections and anticipating corrections than the actual corrections themselves.”
Thirdly, because market timing is ineffective for most investors, embrace passive investing, especially for the majority of your long-term savings.
The debate between active and passive investing is long-standing. However, a growing number of investors are recognizing the advantages of passive investing. Passively managed investment funds now surpass actively managed funds in total assets.
Passive investing offers several benefits: lower costs (fewer fees and taxes), reduced risk (through diversification), greater transparency (you know exactly what you own), and historically, comparable or better long-term returns compared to actively managed funds. Passive investments typically aim to mirror the performance of a specific market index, like the S&P 500.
In his 2007 Shareholder Letter, Warren Buffett famously commented, “the active investors will have their returns diminished by a far greater percentage than will their inactive brethren. That means that the passive group – the “know-nothings” – must win.”
Best Investment Opportunities for Building Wealth
Given the principles of passive investing, what are the optimal investment vehicles for how do you get rich with no money?
1. Stock ETFs (Exchange-Traded Funds)
Investing in company stocks is a proven wealth-building strategy. As a shareholder, you benefit from the growth and profitability of the companies you invest in – essentially, these companies are working to grow your wealth.
The most efficient way to invest in stocks is through ETFs. Stock ETFs are passive investment funds that offer low costs, diversification, transparency, and historically strong long-term returns.
Instead of purchasing individual stocks, which can be riskier, ETFs allow you to diversify across a wide range of stocks within a specific market segment or index. This diversification reduces your overall risk without the higher fees and potential for underperformance often associated with actively managed mutual funds.
Stock ETFs enable you to diversify across various markets, such as developed markets, emerging markets, and specific countries like the United States. You can also diversify by company size (large-cap, mid-cap, small-cap) and industry sectors (technology, finance, healthcare, etc.).
Vanguard is a leading provider of low-cost, transparent ETFs, offering a wide selection to build a diversified portfolio.
While stocks are generally considered riskier than other asset classes, they have historically provided the highest long-term returns. With a well-diversified strategy, you can mitigate risk and maximize potential returns.
2. Bond ETFs
A bond is a debt instrument issued by governments and corporations to raise capital. Bonds can be corporate bonds (issued by companies), government bonds (issued by federal governments), or municipal bonds (issued by local government entities). When you invest in bonds, you are essentially lending money to these entities, and they repay you with interest over time.
Similar to stocks, the most efficient way to invest in bonds is through bond ETFs.
Bonds are generally considered less risky than stocks but typically offer lower returns. However, when included in a diversified investment portfolio alongside stocks, bonds can help reduce overall portfolio volatility and risk. They tend to perform differently than stocks, providing a balancing effect.
3. REIT ETFs (Real Estate Investment Trust ETFs)
Instead of directly investing in physical real estate, which can be capital-intensive and illiquid, REITs offer an alternative way to participate in the real estate market. REITs are companies that own, operate, or finance income-producing real estate.
Investing in REITs allows you to profit from the real estate industry without the complexities of property management. When the value of the underlying real estate holdings or mortgage portfolios increases, your investment grows. REITs are also known for paying out high dividends (they are mandated to distribute at least 90% of their taxable income to shareholders as dividends), providing a stream of income that can be reinvested.
Like stocks and bonds, ETFs provide the most efficient way to invest in REITs, offering diversification and liquidity.
10. Leverage a Robo-Advisor
Creating and managing a diversified investment portfolio can seem daunting, especially for beginners learning how do you get rich with no money. New investors often face questions like: How do I allocate my investments across stock ETFs, bond ETFs, and REIT ETFs? How much should I invest in each? When should I buy? Which ETFs should I choose?
Robo-advisors have emerged as a solution to simplify and automate investing. Robo-advisors are online platforms that use algorithms to build and manage diversified investment portfolios based on your individual risk tolerance and financial goals.
A robo-advisor like Money-Central Smart Invest utilizes Modern Portfolio Theory to construct diversified portfolios consisting of stock ETFs, bond ETFs, and REIT ETFs.
Each investor receives a personalized portfolio tailored to their specific risk profile. Robo-advisor platforms also automate key investment processes, such as regular deposits, dividend reinvestment, and portfolio rebalancing, ensuring your portfolio stays aligned with your long-term financial objectives.
Below is an example of a portfolio that Money-Central Smart Invest might create for a growth-oriented investor. This portfolio includes stock ETFs diversified across various markets (US, developed international, and emerging markets), bond ETFs diversified globally, and a REIT ETF.
growth portfolio sarwa how to save wealth from nothing
Each portfolio has a specific asset allocation (e.g., 88.3% stocks, 6% bonds, and 4.8% REITs in this example), reflecting the investor’s risk tolerance level (in this case, a higher allocation to stocks for a growth-focused investor).
Robo-advisors facilitate passive investing, removing the temptation of market timing and emotional investment decisions. They provide access to a structured, diversified portfolio designed to maximize returns while managing risk.
Your primary role when using a robo-advisor is to consistently contribute to your portfolio and allow your investments to grow over time within your chosen asset allocation. This is a streamlined and effective approach to how do you get rich with no money.
Takeaways: Your Path to Wealth from Nothing
If you’ve ever wondered how do you get rich with no money, understand that it’s not an unattainable fantasy. It is a process built on consistent, actionable steps. You can achieve financial independence by focusing on:
- Continuously improving your financial literacy.
- Establishing a stable income and exploring passive income opportunities.
- Minimizing expenses to maximize savings.
- Protecting your finances with insurance and an emergency fund.
- Investing your savings passively in diversified ETFs (stock, bond, and REIT ETFs).
- Automating your investment strategy with a robo-advisor for a streamlined and disciplined approach.
Ready to take control of your financial future? Explore Money-Central Smart Invest today and start building your wealth-building plan.
Important Disclosure:
The information provided in this article is for general informational purposes only and does not constitute personalized investment advice. Investors should conduct their own due diligence and seek advice from a qualified financial advisor before making any investment decisions. Investment strategies should be aligned with individual risk profiles and financial goals. Past investment performance is not indicative of future results. While data from third-party sources is believed to be reliable, accuracy cannot be guaranteed. This content is not an offer to buy or sell any securities. Opinions, news, research, analyses, prices, and other information are provided as general market commentary. money-central.com does not warrant the accuracy, reliability, or completeness of this information and is not liable for any losses arising directly or indirectly from the misuse of this information. All investment decisions involve risk, including the potential loss of principal.
