There are a few things as gratifying as being wealthy; the ability to afford what you need when you need it. Hypothetically, some of us think those who can do so may have inherited a gold mine from their parents while others think that mother luck shone more brightly on them. To the categories of persons who embrace this perception, building abundance from nothing is mission impossible.
On the contrary, the rate at which national economies are churning out rich people has continued to spike over the years. According to a report by Wealth–X in 2019, over 60 per cent of the global population of those with assets of 30 million dollars and above are self-made.
Excitingly, within a year after this submission, it was observed that the number had almost a 10 per cent bullish effect which shot the figures from 265,490 to 290,720. This shows that what others tag as mission impossible is constantly becoming possible for others.
In this article, we will be distilling some sure-fire approaches you can explore to build affluence from nothing and set yourself on the path of financial freedom.
Learn about Money: perhaps you are thinking you have already hit the end of financial knowledge, hence there is nothing new to learn. But the most dominant power in every man’s life is his mind. Once your mind is purged of certain prejudices and beliefs, your life will experience a paradigm shift in almost every facet.
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Therefore, the first approach to building from nothing is by committing time and resources to financial education. Become more conversant with monetary jargon like income, net worth, expenses, investment, return of investment, passive income, financial liberty, purchasing power, shares, dividends, debentures, stock, and a host of others.
Read financial books and reports, listen to interviews with financial gurus, take courses, listen to podcasts, follow sites on financial education like Peak Performer Africa and make it a part of your daily itinerary.
However, there is a little snag to this, the proliferation of financial information means there is an avalanche of erroneous information as well. So, ensure you follow credible sites, read authors and listen to personalities who have proven their mettle on financial matters.
Find a dependable source of income: there is a veritable saying that you use the money to pursue money. Imagine having a sellable investment idea without cash to execute it. Ironically, this has been the bane of most people who envisage living a wealthy lifestyle at a certain stage of their life.
You cannot set up any business without money. Therefore, you cannot amass money without a dependable source of income. This is to tell you that opulence is not from betting, Ponzi schemes and multi-level marketing among others.
Abstain from get-rich-quick schemes that promise wealth in the flash of a pan. Building sustainable wealth only comes from creating and offering value over time. If you are not earning a steady income from the intrinsic value you are giving, your dream of being wealthy is just a hallucination.
Get employed and earn wages, if you are a business owner, pay attention to creating long-term value by exploring more avenues for efficient, and faster ways of satisfying your clients or customers.
Draft a budget: Writing a budget and following it religiously is essential in your journey of building wealth from nothing. Based on the regular source of income observed earlier, it is imperative to draft a budget to streamline how you spend your money at every interval, preferably per month.
A budget is very important for inculcating and maintaining financial discipline. Without it, you will find your expenses swerving from the relevant to the irrelevant. This invariably means that with a budget it is easy to track the things that can be deleted from your want-list, lower your expenses and surge your investments and savings.
Adopting a budget is a potent way of building and for a good budgeting technique, you can use the 50:30:20 formula. This formula allocates 50 per cent of earnings to vital expenses like rent, food, healthcare, and mortgage, 30 per cent to non-vital expenses like shopping, leisure, and holidays while the remaining 20 per cent is for investment and saving.
Have enough insurance cover: the thought of paying a premium consistently makes a lot of people shy away from insuring their assets and liabilities. Ironically, running away from paying a fragment of your earnings and spending more than your accumulated earnings to purchase or set up what you have lost is tantamount to being penny-wise, pound foolish. A key item your budget should cover is insurance. Insuring yourself and valuable assets helps you avoid incurring monumental losses in the event of an ugly downside.
In the worst scenario, have a health insurance package so you do not liquidate your account for a costly ailment. Also consider insuring your real-estate assets, automobiles, and even dependent relatives. While creating wealth is the goal, few things are as phenomenally excruciating as losing your wealth to the ugly tides of life. Hence be proactive and insure your most treasurable belongings.
Practice ‘extreme’ savings from your income: while it is good to start with the 50:30:20 saving formula, you will realise that you can save more if you make a concentrated effort. The moment you are focused on building wealth, you will discover that your budget can be doctored to prune out certain items.
Once you discover such items, do not hesitate to take them out of your expenditures. When that is done, save the extra cash you have freed up and alter your financial pool progressively. Below are suggested ways you can downsize your expenses to save more money:
• Buy groceries in bulk
• Cook more often at home
• Avoid turning on appliances you are not using, to reduce energy consumption bills.
• Do not spend more than thirty per cent of your earnings on rent.
• Buy luxuries last
Set up an emergency fund: after mastering the act of saving money, another action to help you build wealth from nothing is to set up an emergency fund. This is more like self-funded insurance. It is the money you allocate for unforeseen expenses like automobile repairs, job loss, and socio-political or health-induced uncertainties.
You will attest to the fact that the above-listed situations are capable of dismantling your savings and altering your financial goals. The uglier side of these is that they can make you incur debts or sell off your properties and investments. Debts are serviced with interest and emergency sales are usually a rip-off on the seller, so it is a no-no if you intend to build wealth from nothing.
To avert these, set up an emergency fund that covers three to six months of your monthly expenditure. Ensure the funds are domiciled in an account you will easily access when you need it. Note that just like insurance, an emergency fund is not set up to make you wealthy, rather it is done to save you from incurring debts or selling off your investments in emergencies.
Improve your skills: there are two potent ways of boosting your savings and investments i.e., reducing your expenses and growing your earnings. While a lot of people will focus on the former, suffice it to say that the latter deserves its fair share of attention.
If you are under one’s employ, improve your skill set by enrolling in professional courses and immersing yourself in continuous career development. By improving your soft and hardware skills, you have higher stakes for promotions and better job offers from other employers, which will inarguably translate into more monthly take-home.
On the other hand, if you are a business owner, better your knowledge of the market, inject more resources into innovation, and seek ways of providing more value to customers. By doing these, you are sure of increasing your market share thus racking in more revenue.
Explore passive income ideas: apart from increasing your income from your regular job or business, you can explore other ways of earning passive income. Passive income is essential for anyone who desires to build wealth from nothing.
However, there are two types of passive income; investment passive income – your money works for you-, and non- investment passive income- you do a little work on the side-. In the global digital economy, we have today, there are a plethora of money-making opportunities littering cyberspace. You can make money from blogging, affiliate marketing, digital marketing, etc.
Embrace investment opportunities: after engaging all the steps above, you must know that the most realistic means of building wealth from nothing is by investing. While you are increasing your income and doing all the necessary savings, look for a promising investment opportunity to key into.
Remember that the money you pile in the bank is losing value every day due to inflation, so entrust your emergency with the bank and invest your savings.
Study the industry you intend to invest in and observe the market trend over time. Ask questions, read and draw from the experience of those who have toed that line, so you can learn from their mistakes and achievements.
Based on the popular axiom that Rome was not built in a day, it is pertinent to note that building wealth from nothing requires a deliberate and consistent effort that will oftentimes span into years and decades. However, there is always a silver lining once you are focused and committed to the right processes.
Keywords: build, income, saving, savings, investment, money, wealth