How to build wealth from the scratch

When you are living paycheck to paycheck, down on your luck, or living a student lifestyle, it can be difficult to imagine a world where you are suddenly building wealth.

You don’t have a dime right? The good news is, there is still hope! Check this out.

Truly, it’s never as easy as the mouth can narrate…

To start saving, you do need an income first and foremost. And if you are in debt or living on your own, it can be much harder to see the light at the end of the tunnel.

Building wealth, no matter what, is much easier starting with a clean slate than digging yourself out from a hole.

But you have to start somewhere, which is what nearly everyone who is wealthy today did at one point in their lives.

Here are a few steps that can put you on the path toward building wealth from scratch — even when you are starting with nothing, or worse, with debt.

Step #1: Adjust your lifestyle

Adjust your lifestyle to build wealth from scratch

Many would be wondering the context, but believe it if you are flat broke; the first thing to do is to stay away from people that will tempt you to lavish money to impress the society. It’s better to be wealthy than live wealthy. This is really a big challenge because many will misunderstand your present predicament or future goal. Just stay put to your discipline, you will get there.

Also read: Obvious signs you will be wealthy

Step #2: Reduce expenses

Reduce expenses to build wealth from scratch

One of the biggest challenges you will encounter as you try to build wealth is keeping your income in line with your expenses. To get ahead, you need expendable income; and when you are spending up to the brim of what you bring home, you will always end up with nothing to save.
Also read: How to build wealth on a small salary

The solution to this conundrum is simple, yet may be painful for many: You need to keep your expenses as low as possible for as long as possible. For some people, that could mean living a few extra years at home with mom and dad while you pay off student loans. For others, it could mean getting an apartment with three friends instead of scoring your own place. Go without cable television for a while, ditch your smartphone, eat cheap and easy meals, and ride a bike instead of using public transportation as often as you can.

Remember, this move might only need to be temporary as you position yourself in a better financial place. But the bottom line remains the same: Saving money is immeasurably easier when your expenses are as low as they can go. So start cutting.

Also read: Steps to budget correctly

Step #3: Avoid new debts and cut out old ones

Remove all debt to build wealth from scratch

Another demon that could be killing your wealth-building dreams? Good old-fashioned, debt. Unfortunately, as many of us have found over the years, getting into debt is a piece of cake. Combine a few credit cards with a few bad months and you can easily be staring down years of minimum payments in no time. Of course, the solution is, and always has been, to stay out of debt in the first place.

Regardless, whether it’s student loans to pay off or credit card debt to avoid, you will be much better off if you avoid new debts and destroy the ones you already have. To get out of debt, you can try keeping a debt record book and strike any method that suits you to pay monthly, no matter the amount. Do whatever it takes to get the job done.

Also read: How to manage debt of any size

Step #4: Building more income source

Building more income source create wealth from scratch

Most of us think of income in terms of our regular 9-to-5 jobs or part-time work, but that perception is slowly changing. A new sharing economy built around technology has managed to capture our freelance aspirations. You no longer have to get a second job to start bringing in more income; you just need to find a way to earn more money than you are earning now. But, how do you do that?

According to Jim Wang of Bargaineering.com and Microblogger.com, it’s about finding something — anything —someone will pay you for and building a business around it.

“Building wealth is about creating value and then recapturing that value in financial compensation. Whether it’s providing services, knowledge, or experience, if you aren’t creating value then there’s nothing for you to build wealth with.”

If you have a talent or skill, find ways to monetize it. Search for a new side hustle on freelance sites like Fiverr.com, TaskRabbit.com or ELance.com. Buy and resell items on Ebay.com. Mow yards. Clean houses. Refinish furniture for resale. Tutor high school students. The options are only limited by your abilities and passion. Obviously, all side hustles don’t apply to everyone, but that doesn’t mean that everyone doesn’t have at least one skill they can capitalize on.

Also read: Startup financial steps many ignore

Step #5: Invest wisely

To build wealth you must invest

Once you cut your expenses and embark on a debt pay-off plan you can live with, it is time to take the next step — investing. We’ve written dozens of articles on how to start investing and Investing 101 if you are looking for a place to get started, but the most important thing is that you start now.

If your work offers a company 401(k) and company match, that is an excellent place to start. Figure out how much of your income you can live without and let them deduct it from your paycheck automatically. It might make your paycheck a little bit smaller at first, but you will get used to it over time. And most importantly, you will be building wealth with no effort on your part.

If you don’t have a work-sponsored retirement plan, you have a little more work to do. Still, the resources are there if you look hard enough. Check out Vanguard or business news for resources on opening your own retirement or brokerage accounts, or check out our many articles on best investing practices and strategies.
Always spend less than you make and invest the difference wisely.

Also read: How to build wealth by saving to invest

Conclusively,

Inheriting money is easy, but building it from scratch is a whole work. But you have to start somewhere.

Just remember, the keys to building wealth are adjusting lifestyle, reducing expenses, eschewing debt, creating more means of income and relaxing to invest wisely and properly. The path to get there can take a million different twists and turns, but the end result will always be better than if you had not tried in the first place. Start today!

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