How to get rich from nothing

How do you get rich from nothing?

The first step to getting rich from nothing involves believing that you can actually get rich. Afterwards, focus on reducing your expenses, growing your income, and investing the majority of your income. At a minimum, aim to invest 15% or more of your income and work on investing 40%.

Imagine, being the first one in your family to save $1,000,000. You might even be able to retire early if you make enough money.

Getting rich is a mindset. You too can be rich when you believe in yourself and work towards your goal consistently.

Luckily for you, I’m going to break down the steps you need to take to get rich from nothing. It doesn’t matter if you’re making less than minimum wage. The steps to getting rich are the same for everyone, but very few people actually take action.

21-024 - How to get rich from nothing

This article may contain affiliate links which pays the commission and supports this blog. Thank you for your support!

How to get rich from nothing

In order to get rich from nothing you must believe that you can actually get rich. In addition, the only way you’re going to get rich is by managing your money. Focus on reducing your expenses, growing your income, and investing the difference.

Getting rich is simply a numbers game. The more you invest, the harder your money works for you. Therefore, your money is the number one tool that’s going to get you rich.

Money invested works with compounding interest. Essentially, the more money you put into Investments now the more money you’ll have later.

So what I’m going to show you today is all about keeping expenses low, building income, and investing your cash.  You’ll be surprised at how fast wealth building can actually happen if you can reign in all three of these skills.

Click to Tweet! Please Share!Click To Tweet

Believe in yourself 

In order to get rich you must first believe in yourself. You need to believe that building wealth is possible and have an abundance mindset. Understand, no one else but you can make you rich and that no one is going to save you, including the government.

Poor people believe that there is no way to get rich. They continue to stay poor because they have a limiting belief about themselves and the system that surrounds them. Poor people often look to the government and believe the government should fix their problems.

Rich people have the belief that opportunity surrounds them. They understand that the world and their future can change if they put in the work to make the change happen. Getting rich is a choice and the future is in your hands. 

Keep in mind, changing your situation does not come easy. You have to push back against life and routine in order to make changes. The bigger the change, the bigger you need to push back against life.

For example, you may hate your job now. An easier change would be to look around and search for a different job opportunity. Starting your own business can lead to greater success, but requires a lot of energy and time on your part to make happen.

Live like you’re poor

When you finally believe that it is possible to become rich, the next step is to live like you’re poor. Wealth building is all about investing the difference between your income and what you spend. It is hard to invest money when you’ve tied up your income in useless junk that you hardly use.

One of the biggest problems and reasons why people don’t build wealth is lifestyle inflation. Whenever you get a salary increase, people tend to adjust their lifestyle to meet their new salary. Instead, you should be investing the salary difference.

People are too busy spending their money on stuff rather than using it to buy back their freedom. When you have enough money invested, you can retire and live a free life.

Let’s assume two people make $72,000 per year. What if they could live on a $36,000 per year salary and we’re willing to retire on $36,000 per year? 

Person A  is able to invest $36,000 per year while Person B is able to invest only $10,000 per year. Each person needs $900k invested to withdraw $36k per year using the 4% withdrawal rule.

Starting from nothing, Person B is able to reach a $900k portfolio in 27 years. Person A is able to reach a $900k portfolio in only 14 years! Person A was able to reach retirement faster than Person B because they lived a modest lifestyle.

Avoid debt and liabilities

As you can see from the example above, it is hard to build wealth if you are constantly spending your money. The more money you are able to save, the easier it will be to build wealth. Unfortunately, people take on debt which costs them money every month.

For every dollar of debt you take on is another dollar you can’t invest. You may enjoy your new fancy vehicle, but you’re paying the price in your freedom.

People will literally add years of their life in the workforce just to have a new vehicle that they didn’t even need. Do you want to spend more time working a job you don’t like to afford one more room in a house?

Debt and liabilities cost you money. When you take on debt, you are pushing yourself further away from building wealth.

You can’t always avoid debt. After all, saving up for a house isn’t the easiest because they’re just so dang expensive. The point is to use debt responsibly.

Before you buy a $300,000 house, ask yourself if you could live in a $150,000 house. You will pay less money in interest and can always upgrade later. When you pay less money in interest you have more money left over to invest.

Track your expenses

You must track your expenses in order to build wealth. People lose money when they don’t track expenses because they have no idea where their money is going. Budgeting or tracking expenses allows you to see where wasteful spending is occurring.

Building wealth really breaks down to a matter of math. You must invest x amount of dollars for so many years at a percent return on investment. 

Maybe you want to retire on $1,000,000 in 30 years. You’ll need to invest around $700 per month at an 8% ROI to achieve your goal.

For some people, they would simply automate a $700 per month payment to their investment account. Others will track their spending to make sure that they have enough money to invest.

However, the more stringent you are when it comes to budgeting and tracking your money the better. The majority of wealthy people spend more time budgeting in managing their money than poor people.

Personally, I am a fan of tracking every dollar earned. I know where every dollar is going in my budget before I’ve earned it. My budget tells me when I’ve overspent on eating out.

Stringent budgeting allows me to track my money and keep me on my goals. If I get lazy, the numbers don’t lie and tell me that I’m eating too much takeout.

Grow your income 

Investing is the best way to grow your wealth. In order to grow your wealth, you need to have cash to invest. Growing your income is the number one way you can control your future.

You can only reduce expenses so much. Budgeting is great, but you still need a certain amount of money to live. At some point, you must switch from playing defense to focusing on offense.

Remember our example investing $700 per month at an 8% return for 30 years? At the end of your 30 years, you would have approximately $1,000,000. 

What if you got a $5,000 per year pay raise? You would now be able to invest $1,116 per month assuming you invest the full $5,000. 

Your timeline for reaching $1,000,000 has dropped from 30 years to now 25 years. In other words, you could retire five years earlier by simply growing your income and investing the difference. 

Be a creator, not a consumer

People who tend to attract wealth are creators of content and very little consumers of content.  Typically, creators make money when consumers pay for created content. Make more money by being a creator of content.

Look at Netflix for an example. Netflix makes millions of dollars by creating high-quality content that consumers are willing to consume. Netflix is a creator business.

There are plenty of ways that you yourself can create. You can start a YouTube channel, Blog, podcast, or any other means of creating and distributing content.

You spend $8 per month paying for Netflix. Nothing about you watching a Netflix show is going to earn you money. However, it’s going to make Netflix a lot of money when hundreds of thousands people consume their content.

What if you spent even an hour of your day creating content for YouTube? Create enough content and you might find yourself the sizable audience. You can learn to monetize that audience and earn extra money.

At the end of the day, being a Creator is about making more money. You are increasing your chances earning revenue rather than just consuming content. Any money you earned can be invested to grow your wealth.

Side hustle

Side hustles are another good way to increase your income. Remember, the goal is to invest as much money as possible to let your money do the heavy lifting. Side hustles are perfect for people that want to earn more money and can be done without starting your own business.

Most people think of side hustling as a super involved task, like starting your own business. However, you could do something as simple as deliver pizza, bartend, or drive for Uber.

Add income streams

Rich people are always looking for ways to add income streams. Most millionaires never have one source of income, but look at multiple streams. The more streams of income you have, the easier it is to build wealth.

Most people only have a day job. You show up and work your 9 to 5 and you get a paycheck. Unfortunately, you have little to no control over how much that job pays you.

You might start a blog to add a second income stream. Eventually, your blog might start to pay you an additional $1,000 per month.

Now, you take that $1,000 per month and invest it into dividend-paying stocks.

With a little bit of effort, you have now created yourself three different income streams. Creating multiple streams of income is important because you never know when one of your streams is going to end.

Most people rely on their 9 to 5 job as their only source of income. However, your nine-to-five job will not hesitate to let you go when times are tough. Many people lose their job every year because the company they work for doesn’t want to lose money.

A second stream of income can protect you from a job loss. I would much rather be earning $1,000 per month on the side in case my job lets me go.

Invest your money

If you’ve been with me this entire article, then you know investing is where everything has been leading towards.Investing is the only way you are going to see substantial wealth generation. You need to find a way to make money in your sleep or work until you die.

Investing doesn’t have to be complicated. You can simply find yourself a few good exchange-traded funds and consistently put money in every month.

You can always hire a money professional to invest your money for you. There are many brokerage firms which deal with investments and have years of experience.

As we’ve previously mentioned, investing works because of compound interest. Compound interest makes it extremely easy to reach your financial goals.

Let’s look at it this way, how long would it take you to save $1,000,000?

Simply putting $700 per month into a savings account, it would take you 119 years to save $1,000,000. Investing can reach $1,000,000 in 30 years at 8% ROI. Investing works because your money makes more money.

Crunch the numbers for getting rich

As I previously mentioned, you need to do the math behind getting rich. You need to understand how much money you can invest every month. When you know how much money you can invest, you’ll know how long it takes to reach financial goals.

Saving $2,000,000 will take a longer time than saving $1,000,000. It will be much faster to reach $1,000,000 if you can invest $1,500 instead of $500.

Your first step should be to determine how much money you want. Typically, this is a number you want to retire on. Most people are looking to withdraw 4% of their portfolio in retirement.

Therefore, if you wanted $50,000 per year salary in retirement then you will need $1,250,000 invested.

Next, you will either need to know your investment timeline or investment contributions per month. How much can you invest each month or how long until you reach your goal?

Maybe, you know you need $1.25 million in 30 years. Use an investment calculator to estimate how much you should contribute every month.

Alternatively, maybe you have $500 to contribute every month. How long will it take you to reach $1.25 million?

If you’re not happy with the results, then you need to find a way to adjust. You might have to push out your timeline or find a way to invest more money.

Click to Tweet! Please Share!Click To Tweet

Summary: How to get rich from nothing

As you can see, getting rich from nothing involves having a wealth-building strategy. You need to find a way to increase your income, reduce your expenses, and invest the difference. The more cash you are able to invest, the faster you will build wealth.

In order to reduce your expenses, live like you are poor and track your spending. You should look to avoid debt and liabilities at all costs. Not every single debt can be avoided, so use debt responsibly.

Grow your income through whatever means possible. You want more money to be able to invest. Focus on becoming a creator, side hustling, and adding income streams. 

Finally, turn towards investing to make your money work for you. The more money you can invest, the more money you could have later. Take time to crunch the numbers behind getting wealthy. Make sure you are on track to building the wealth you want. 

John is the founder of TightFist Finance and an expert in the field of personal finance. John has studied personal finance for over 10 years and has used his knowledge to pay down debt, grow his investment portfolio, and launch a financial based business. He is committed to sharing content related to personal finance based on his experience in his career, investing, and path towards reaching financial independence.