If you don’t have much money currently, it may seem like becoming wealthy is an impossibility. But with the right set of strategies, almost anyone can build wealth from scratch.
To accomplish this, three main areas require your attention. First, you must have an investing strategy; investing in assets is the best way to generate wealth long-term, thanks to the power of compound interest growth. Second, you need to have a solid career in place; without a reliable way to make money, you won’t have enough to meet your current living expenses and still invest. Third, it’s important to manage and minimize your expenses, so you can end up with more money to invest.
We’ll explore each of these areas in turn.
First, you need some kind of investing strategy in place. These are some of the most common approaches:
1. Property investment. Investing in real estate can be enormously beneficial because you can make money in multiple ways. For example, you can work with a property management company to rent your property to a tenant and generate consistent cash flow in the form of rent. You can also benefit from increasing property prices over the course of years, potentially doubling or tripling your investment over the long term.
2. Stock investment. Even more commonly, people turn to the stock market to accumulate wealth. Stocks allow you to invest in publicly traded companies, capitalizing on their long-term growth. You can benefit from dividends (public distributions of profit, usually on a quarterly basis) or just buy and hold for the long term.
3. Equity investment. You could also invest in private companies as an angel investor or venture capitalist. If you’re enterprising, you could even consider starting a business of your own.
In addition to these individual investing strategies, it’s important to diversify your portfolio; balance your collection of investments with different types of assets so you increase your total propensity for growth while eliminating the possibility of singular devastating losses.
Career Development Strategies
You should also have career development strategies in place:
4. Play to the distant future. Don’t choose the career that will make you money now. Choose the career that will support you for the longest period of time. Look for fields with high levels of projected demand and those with a high possibility for growth. Is this a role you could grow into over decades?
5. Invest in your own education and growth. After deciding on a path, you’ll need to invest in yourself. Go back to college and get an advanced degree, attend workshops, or start an apprenticeship to set yourself up for a better future.
6. Keep pushing for higher positions. Once you’re on the right career track, you have to keep pushing if you want to advance. Ask for a raise when appropriate to do so, look for available promotions when you can, and always keep an ear out for ways you can improve yourself as a professional.
Expense Management Strategies
Finally, you’ll need some kind of system to manage your ongoing expenses:
7. Budget consistently. Budgeting is one of the best financial moves you can make for yourself. It allows you to keep track of your income and expenses in one place, and gives you a platform to analyze your past activity. It also gives you an opportunity to plan for the future, helping you set goals and stick to them.
8. Live below your means. Try to live below your means. In other words, adopt a lifestyle that’s significantly cheaper than what you could hypothetically afford. If you make $50,000 a year, pretend that you only make $35,000. If you’re successful in this, you’ll have an extra $15,000 per year you can funnel into investments or other important purchases.
9. Minimize monthly expenses. On top of that, you’ll want to find ways to minimize your monthly expenses. Consider shopping at a different grocery store to score lower prices on the foods you eat regularly. Cut some of the subscription services you don’t use much (or the ones you don’t truly need). These small cuts can add up quickly, resulting in hundreds of dollars of savings.
10. Protect yourself against devastating losses. Finally, shield yourself against devastating losses by purchasing robust insurance policies that protect your assets. You should also have an emergency fund of at least a few thousand dollars set aside so you don’t have to go into debt due to an unexpected loss or expense.
You can’t use these strategies to become a millionaire overnight, but even with a modest income and humble beginnings, most people can use them to develop wealth over the course of a lifetime. Remain patient and keep learning; eventually, you’ll have everything in place that you need to become wealthy.