How To Build Wealth From Nothing In 12 Simple Steps

Last Updated June 29, 2024 by Davina Kelly

Contrary to popular belief you don’t have to earn six figures to build wealth. You can earn a low income and still build wealth from nothing.

Regardless of your current financial situation, if you put the right things in place you can achieve financial stability. 

Building wealth from scratch is an attainable goal, but it requires the right mindset, strategic planning and a willingness to make informed decisions. 

Before I educated myself about personal finances I used to be in debt and live paycheck to paycheck.

But once I adjusted my mindset and put the things I learned into practice I was able to pay off my debt, save a lot of money and build a substantial investment portfolio. If I can do it so can you!

Building wealth isn’t only for rich people, no matter what your income level is you can still build wealth. 

In this post, you are going to learn how to build wealth with low income as well as ways to improve your financial situation.

After reading this post, you will be able to work towards your long-term financial goals and set your future self up for success.

This post is all about how to build wealth from nothing.

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How To Build Wealth From Nothing:

1. Create a Budget & Stick To It

You have probably heard a million times that you need to have a budget, but having a budget and managing your money well is an important part of building wealth. 

A budget is a great tool to help you manage your finances. It is essentially a plan to give your money direction so that when you get paid you will know exactly where your money needs to go. 

When you know how much money you have coming in and what’s going out you are less likely to overspend and wonder where your money went at the end of the month. 

I know that creating a budget can seem overwhelming, but if you find the right budget for you and your personality you are more likely to stick to it. 

You can keep it simple you don’t have to track every single expense to have an effective budget. All you need to do is list your income and expenses then subtract your expenses from your income to get your net income. From your net income, you can save, invest or pay off debt. See, it can be simple!

Once you have a budget in place you need to stick to it. This will help you to understand your spending habits and identify areas where you can cut costs and make improvements. 

If you are new to budgeting and need some help putting yours together, you can read here to learn how to create a budget. I have also included a free printable budget and expenses tracker to help you get started.  

2. Automate Your Finances

Automating your bills and regular expenses will save you time and help you avoid paying your bills late and incurring fees. It will also simplify the process and help you resist the temptation of spending all of your money before paying your bills and saving. 

Set up automatic transfers from your current account to your savings and investment accounts. Do the same for all of your bills and any expenses you can to ensure that you don’t miss any payments.

You can set reminders in your calendar for when your bills are due and when they need to be renewed to help you stay on top of everything. 

3. Spend Less Than You Need To

If you want to build wealth from nothing you need to live below your means. Making a lot of money doesn’t make you rich, your money habits will. If you make $100,000 a year but spend it mindlessly you won’t be able to build wealth. Spending less than you make will free up more money to save and invest and help you build wealth faster. 

I am not saying that you have to stop doing the things you enjoy, in fact, I think it is important to make room for fun in your budget so that you can enjoy the fruits of your labour. But it is important to learn your spending behaviour and make adjustments. 

If you stop impulse spending, cut out unnecessary expenses and prioritise spending on essentials and items that align with your long-term goals you will build wealth.  

Keep this in mind, if you invest more than you save, save more than you spend and spend less than you need to you will set yourself up for success. 

4. Save, Save, Save!

Saving money is the foundation of wealth building, if you are not able to save money you can’t build wealth it’s that simple. I don’t mean to be harsh, but it is true. 

Having savings set aside is like having a safety net for any uncertainties and it will increase your financial security and peace of mind. 

It is recommended to save around 10% of your income, but if that is too much you can just save a small portion of your income regularly. Saving a small amount is better than not saving at all. Once your financial situation improves you can increase the amount you save.  

The first thing you should do with your savings is build an emergency fund to cover any unexpected expenses and avoid debt. Aim to have at least one month of living expenses put aside, if you can save three months that is even better. 

Once you have your emergency fund in place you can start saving for your future. To keep you motivated to stay on course you can set savings goals, for example, your goal could be to save $10,000 in a year. 

To maximise your long-term savings put them in a high-yield savings account. This way you can earn interest on your savings and you won’t be tempted to dip into it because it will be in a separate account.

You don’t have to become a penny pincher to save money, it is about sticking to your budget, being frugal (not cheap) and making smart choices with your money. 

For example, if you want to buy a new iPad you can buy it during one of the sales to get it for a cheaper price. You can find creative ways to save money without sacrificing the things you enjoy. 

5. Find Ways To Increase Your Income

Learning how to manage your money and saving is essential, but there is only so much you can save before you reach a limit. At this point, you need to look at ways to make more money.

Increasing your income will significantly boost your wealth-building journey. It will also provide you with sustainability and most importantly it will allow you to put more money towards saving and investing. It will also boost your confidence because you will know that you don’t have to rely on someone else to make money.

Most people don’t have a lot of money left over from their paycheck after paying bills, expenses and savings. By making extra money you will have more disposable income to put towards your financial goals and treat yourself. 

You can increase your income by asking for a raise, taking on a side gig, starting a side hustle or freelancing. Or you can take it a step further and start a business. 

If you have always worked a 9 – 5 job I know that thinking about ways to make more money can seem daunting. But with the rise in the gig economy and online businesses making extra money is easier than you think.

If you are a beginner the easiest way to make money is by using the skills you already have and offering them as a freelancer. This is how I was able to make money on the side. I work in accounting so I used my skills to offer bookkeeping services to small businesses. Take some time to think about the skills you already have and look at ways to offer them as a service. 

6. Manage Your Debt

I am sure you have heard a million times that you need to pay off your debt so I won’t bore you with the details. However, carrying a lot of debt can hinder your ability to build wealth. 

To be clear, I am not talking about mortgages or student loan debt. The debt I am referring to is consumer debt like credit cards, car loans, and personal loans. 

This type of debt comes with high interest rates that make the debt expensive so it is important to prioritise paying it off as soon as possible. The more money you are paying towards debt the less money you have to contribute to building wealth. 

Make a list of all of your debts and make a plan to pay off the debt with the highest interest rates first. While you are doing this you can make the minimum payments on the other debts.  

Once you have paid off your consumer debt you can put the extra money towards investing. 

7. Invest Your Money

Now that you are sticking to a budget, saving and paying off consumer debt your foundation is laid and you are ready to start investing your money. 

Investing is the most important strategy in how to build wealth from nothing. To build wealth you need to make your money grow and investing is a great way to do this. 

When you invest your money it will generate income through interest and dividends and it will grow in value when the asset appreciates. 

This is also how you make passive income. By investing your money it is working for you and growing without you having to trade your time for money. 

The most common assets that people choose to invest in are stocks and property. Both options have great potential to build wealth, but investing in the stock market has fewer barriers to entry and is a faster way to build wealth. 

If you are just getting started investing in ETFs is a good option. They are low-risk, diversified, have low fees and make consistent returns. For example, the S&P 500 has an average annual return of 9% each year which is pretty good. 

This was the method I chose when I first started my wealth-building journey and I am so happy I did, but lack of knowledge stopped me from doing it sooner. 

If you are new to investing and don’t know where to start I’ve got you covered you can read the posts below to learn how to invest for beginners and learn all about ETFs.

Related: 

How To Invest Money for Beginners The Ultimate Guide

How To Invest In Index Funds a Complete Beginners Guide

8. Max Out Your Pensions

Most young people don’t pay too much attention to their pensions but is a good tax-efficient way to save for retirement. If you have a workplace pension you should take full advantage of it by matching your employer’s contributions.

Your employer will contribute a certain amount to your pension, but sometimes they will increase the amount they pay into it if you agree to increase your contributions too. This is a great way to maximise your pension and plan for retirement. 

Check with your employer to see if they are willing to do this and the level of contribution they are willing to make. Then check your budget to see if you can afford to match their contributions before committing to it. 

Also, check what the maximum pension contributions are in your country to ensure that you don’t exceed the limit and have to pay tax. Read here to learn more about Pensions and how they work.

9. Invest In Your Skills

Investing in your skills is one of the best investments you can make after all you are your greatest asset. As Warren Buffet has famously quoted “The best investment you can make is in yourself.” 

Make it a priority to continuously develop your skills and knowledge through education, training programs and professional development. You can also learn by taking online courses and even investing in a coach or mentor. 

By developing your skills you will enhance your earning potential and open yourself up to new career opportunities and income growth. 

For example, you could invest in a high-income skill like video editing and then become a video editor as a side hustle. This will increase your income and free up more money to contribute to your wealth-building goals. 

If you’re looking for an affordable way to invest in your skills consider signing up to Skillshare. Skillshare is an online learning community that provides educational videos on everything from web design to writing. Once you sign up you’ll get access to unlimited classes, it’s like Netflix for learning.

You can try it out FREE for 30 days by signing up here.

10. Avoid Get Rich Quick Schemes

Beware of any schemes that promise you can build wealth quickly, if it seems too good to be true it probably is! Building wealth is a gradual long-term process and requires discipline, consistency and patience. 

With many options for investing like cryptocurrency and NFTs, it can be tempting to follow the crowd and jump in. But don’t do it! Instead, take the time to do your own research and educate yourself on any opportunity before you invest your money. 

If focus on developing good money habits and prioritise long-term financial stability over short-term gains you will set your future up for success. 

11. Educate Yourself About Money

Financial literacy is crucial when it comes to learning how to build wealth from nothing effectively. If there is an area of personal finance that you lack knowledge in take the time to learn about it. Knowledge is power especially when it is applied. 

One of the best ways to learn about money and how to build wealth is by reading books. Books are inexpensive and packed full of information from people who have already done what you are trying to do.

I work in accounting so I had a solid understanding of how money works, but when I wanted to learn more I started reading books. Some of my favourite personal finance books are Rich Dad Poor Dad and The Psychology Of Money. 

Reading these books made me realise that building wealth isn’t only for rich people, anyone can build wealth no matter what their circumstances are. This was a powerful lesson for me and I have always kept it in mind.

You can also educate yourself about money through online courses, reading blogs and watching YouTube videos and documentaries. Choose the method that works best for you, for example, if you are a visual learner online courses are probably a better option for you. Ultimately learning from others will help you get the same results faster. 

12. Change Your Mindset & Be Patient

Having the right mindset and being patient is key to building wealth. Your money mindset plays a huge role in your financial success. 

If you have a scarcity mindset and believe that you can’t build wealth then you won’t be able to. You need to adopt a positive attitude towards money and believe in your ability to build wealth. I know this may sound insignificant but your mindset does affect your actions. 

It is important to adjust your mindset to align with who you want to become. For example, if you know that saving money will help you build wealth but you still want to keep up with the latest fashion trends on social media that is a conflict. 

In those moments ask yourself do you want to work until retirement age and scrape by living off a state pension? Or do you want to retire when you are ready and continue to live a life you enjoy on your terms? Choose the actions that best align with the outcome you want. 

How To Build Wealth In Your 20’s

If you are in your 20s this is the best time to start building wealth. At this age, you have fewer responsibilities and if you still live with your parents even better because your expenses will be lower so you can put all of your disposable income into building wealth. 

I understand that your younger years are all about having fun and enjoying life and you should absolutely do that. But you can live your best life and work towards building wealth at the same time.

This is the time to start building good money habits like living below your means and practising the habit of saving and investing. Even if you don’t make a lot of money you can put a little bit aside and it will grow significantly over time.  

Wealth refers to the abundance of money and assets so the earlier you start the more you can contribute. Imagine how much more wealth you would build if you had a 10-year head start.

How To Build Wealth In Your 30’s

Building wealth in your 30s comes with some of the same advantages of your 20s. You still have plenty of time, but you may face some challenges. You may have racked up some debt or be living above your means so you will have to make some changes. 

But that is ok, if you have the right budget plan, prioritise paying off debt and cut back on your expenses you can still build wealth from nothing. 

Saving is also important at this point so ensure that you have an emergency fund set aside and max out your workplace pension. Once this is in place you can start investing your money.

How To Build Wealth In Your 40’s

If you are in your 40s don’t worry it is not too late. This is also a good time to start building wealth because you will probably be making a lot more money. 

Look at your financial progress and reassess your long-term financial goals. Consider factors such as retirement age and your desired lifestyle in retirement and adjust your financial plan accordingly. You may also have to take a more aggressive approach by saving and investing at a higher rate. 

Final Thoughts On How To Build Wealth From Nothing

Building wealth from nothing is achievable with the right mindset, strategies and actions. By creating a budget, automating your finances, saving diligently, investing wisely and continuously improving your financial literacy and skills you can achieve financial success. 

Remember this is a journey it won’t happen overnight so you need to be patient, stay disciplined, consistent and remain focused on your own goals and know that your efforts will pay off. 

I hope you have found this post helpful and can now begin your journey to build wealth from nothing. Which part of the wealth-building journey are you on? Let me know in the comments below. 

This post was all about how to build wealth from nothing.

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