Lifestyle | Updated Oct 18

Building Wealth From Nothing:
Step by step guide

DISCLAIMERS: This post is meant for informational purposes only and no action should be taken or refrained from without your own due diligence, such as consulting a qualified professional.

When I started out trying to build wealth from nothing, it was hard. It was so hard to figure it all out. I cried a lot, learned a lot, failed a lot. And I promised myself that if I ever figured out how to do it, I would share what I learned with others so they wouldn't have to struggle as much as me.

Can You Build Wealth from Nothing?

Yes, you can. I did it. I was truly "young, dumb, and broke" and I felt the blaring confusion and hopelessness of that position. I wanted out, but I didn't know how. There was so much informational 'noise' surrounding finances, so many different voices, so much confusion.

But I'm here to tell you that those of us who are willing to face this challenge head-on, and dare to find a way out, we're the ones that do. That's why I'm so proud of you for being here.

Please hear me loud and clear: This first step is the absolute most important!

Some Stats.

Did you know that the vast majority of millionaires actually build their wealth from scratch (aka no lottery or inheritance)? That's right - Almost all wealthy people are self-made. They got rich from choosing to get rich. They did it themselves.

The crazier thing is that many people who inherit wealth, or win the lottery, actually end up losing all or most of that money. That's because they didn't put in the time to learn the mindset and skills it takes to keep and grow money. But that's not you - you're here, and you're ready to learn. So you're the one who's going to become wealthy, right?

So How Do You Build Wealth When Starting from Nothing?

Like I said, I came from nothing and built wealth by myself. I succeeded in building myself a 6-figure net worth before the age of 30, all on a low income. You can do it too. Not by some stroke of luck, but by your own choice.

Here's what you need to do to start building wealth today (even if you have nothing):

1. Break down the confusion surrounding money & finances
2. Understand the basics of finances including: budgeting, saving, & investing
3. Set up your own financial plan (no matter how much money you have)

Let's take a look at each of these steps together.

step One: Breaking Down the confusion surrounding money and finances

None of us will ever make progress if we are confused and running in circles. There's a lot of information 'noise' out there (especially on social media) right now in regards to finances. But all it really ends up doing is confusing people and making you feel like you're not smart enough or rich enough to move forward.

However, this couldn't be further from the truth. Most successful people will tell you that achieving success is all about going "low and slow", or in other words, using common sense rather than fancy terms and hype.

The first thing you need to do if you're going to start building your wealth from scratch, is to assess where you're at in the journey and what your next steps should be.

Set Your Goals

I always like to start with the big picture, because it's an easy place to start and gives you guidance for what direction to head in. It's like using a map so you can finally start walking in the right direction.

So your first practical step is to take a piece of paper out and write down all your biggest financial goals or dreams (try for about five). Think long-term.

Would you like to retire at a certain age? Would you like to be able to take care of your elderly parents? What about sending your children to college debt-free, or setting them up for financial success?

Of course your dream house and cars can be there too. You can even put a number on the net worth you'd like to have. If you don't fully understand net worth yet, don't worry. I'm going to explain it in step 2.

If you want to go more in-depth on goal-setting, you can read my article on goals here.

Want lifetime access to the Goal Planner I designed to help myself set and achieve goals such as paying off debt, buying a house, and starting a business? Grab yours here:

Understand the Fastest Route to Take
The Baby Steps by Dave Ramsey is a plan that has been proven very successful as one of the quickest routes to actually achieve wealth.

It's all about prioritizing what to focus on and when, so that you can make the biggest impact at the quickest pace. Here's the order they recommend:

1. Save up and set aside $1,000 for a rainy day
2. Pay off all your debts to free up more and more of your income
3. Save up a larger cushion in case of emergencies: enough to cover 3-6 months of your expenses; and then,
Save up to buy a house if desired
4. Start investing 15% of your total income
5. Start saving for your children's college
6. Pay off your home mortgage early
7. Build up your wealth and enjoy being as generous as you want

Ask Questions [to the right people!]

I used to get so overwhelmed by everything I didn't know of understand about money, that I would just wallow in hopelessness and confusion over it. I still get like that sometimes when I'm confused about something. But it's ok to not know everything, and today it's easy to find the answers.

The trouble comes when there are 50 different answers at one click of a TikTok button and you don't know which one to listen to.

So here's a guideline: find some real-life people around who have built wealth and proven their methods with the test of time, and learn from them. And also, don't believe everything you hear. Do your own research too.

step Two: Understanding the basics of finances

What is net worth? What are assets and liabilities? Why does it matter? How do you budget, save and invest? These are some basics that no one really taught me, and they are like the building blocks we use to build our wealth. They're really not that complicated, but you should know how they work. Let's dig in.

Net Worth

If you don't know what "net worth" means, that's ok. It's actually just a fancy word to say how much money you have, but we calculate it by also including:

- Any debts or liabilities you have (what you owe), and
- All your assets (everything you own).

Debts and liabilities are the negatives in the equation. Assets, including cash, are the positives. But there's a lot more to assets than just cash. The end result of this equation is your net worth. It's actually pretty simple, and looks like this:

Assets - Liabilities = Net Worth

For example, you would add together the current value of all your money, investments, cars, house, and any other possessions you own. Then you would subtract from that total any debts you owe, including a car loan, credit cards, a mortgage, student loans, etc. And that would give you your net worth number.

Your next practical step in building wealth is to calculate this number. You need to be very thorough and list everything.

Important note: the value of your car or phone is not going to be what you paid for it. Rather, it's how much you'd get if you were to sell that item today. Most things depreciate over time, and a true net worth calculation will reflect this.

Basic Budgeting

Simply put, budgeting is calculating your income minus your outflow each month. You just start with your income and then subtract all your expenses from it. You can do this in 2 ways:

1) At the end of the month, you can create an actual summary of how your money was spent. Or,
2) you can create a plan at the beginning of the month, for how you will spend your money.

I suggest you do both -- create a plan each month before it starts, and then also track how you actually spend your money as the month goes along. You'll be surprised at what you find out!

This process allows you to gain control of your money so you know where it's going and can start putting it to work for you, instead of you working for it.

Budgeting may sound overwhelming, but there are some great tools that can help make it easier and simpler. There are budgeting apps, tracker templates, and the cash envelope system (hello cash-stuffing!)

Basic Saving

Budgeting is really the foundation to saving money. Your budget is the tool that will help you direct traffic and tell your money what to do for you. Trust me, it's possible. That being said, once you're ready to start saving, you need to decide what you're saving for.

Saving is technically the act of putting money aside a little at a time, either for:

- something you want or need but can't afford yet, or
- for a rainy day, aka an emergency fund.

In my opinion, paying off debt also goes into the category of saving, because it serves the same function, which is to increase your net worth, as well as your financial stability and security.

The baby steps I mentioned earlier give you the fastest route to wealth based on priorities for where to put your extra money each month. For example, first you would save for an emergency fund of $1,000. Then once that's set, you would start putting all your extra money toward any debt that you have, (other than your mortgage) and so on down the list.

Basic Investing

Feeling overwhelmed? I hope not. But for me, investing was one of the pieces that really started to confuse me.

Here's the good news: if you're starting with zero dollars, you don't need to be worried about investing yet. And that's not going to put you behind! Ignoring investing until you get the other foundational elements set up in your finances will actually put you on the fast track to wealth.

How?

Well, many people get stuck going in circles of debt, investing, budgeting, spending, saving, etc. never knowing how to get out of that cycle. But if you prioritize right, you'll be able to actually get out of that cycle and will be ready to invest in no time. You'll already have an outstanding financial foundation under your feet.

So once you're ready to invest, what do you do?

While this topic really deserves its own whole article, here are the basics to consider starting out.

1. If you have an employer match retirement account option at work, max out the matched portion.

2. If you're interested in real estate, save up to buy your first house. It's a great asset which grows steadily over time and which we know will always be needed. But to use this as an investment, make sure you do your research first on what factors play into making each house either a good or bad investment. (I'll be putting out more info on this in the future!)

3. Start investing at least 15% of your household income into your retirement. That includes any portion you're already doing at work, but does not include what you're employer is giving as the match. Open a ROTH IRA on your own and place all (or the remaining amount after the one from work) of your 15% into mutual funds.

This also will require research to understand what funds to invest into. Leave a comment or send me a message if you're interested in learning more from me about these topics!

step Three: Setting Up your financial plan to achieve wealth from nothing

Now that you've got the basics down, you should be ready to set up your own financial plan to build wealth from nothing. Here's the step-by-step process for creating your starter financial plan.

1. Where you are going

You will start by figuring out where you're headed, like a map. Grab your sheet of paper you started at the beginning where you put your financial goals. If you didn't do that yet, go ahead and do it now.

2. Where you are starting from

Next, figure out which baby step you're currently on and add that to the same paper. This is your starting point. Remember, the fastest way to build wealth is to do the steps in order, one at a time.

3. Assess the next practical steps that you can start doing this month

Ask yourself a few questions to decide what your next practical steps are in your financial plan. Add these to your paper (you may need more paper), creating a section called "Next Action Steps".

- Do you know your net worth, or do you need to calculate it? (Remember to be totally honest and thorough!)
- Does your budget need work?
- Does your saving need improvement?
- List some things you're saving for and calculate when you'll have each of them completed if you stick to your budget.
- Are you ready to start investing? Do you still need to learn more? Do you want to buy a house first?

4. Draft out the future

Next, you can roughly draft out what steps will come later, in order, and with target dates. However, the most important thing right now is that you stay focused on the one or two practical steps directly in front of you.

Once you accomplish your immediate steps, you will definitely need to come back and reassess. You'll need to see what's next to make sure you keep moving forward. The best financial plan is one that keeps evolving as you and your finances do. You'll learn over time too!

Wrapping Up

Remember that it's more than ok if this process feels slow at first.

One day you'll look up and find yourself as a wealthy, stable person, and you'll see all those around you who are still doing circles and chasing their tail when it comes to finances, and you won't regret it.

I wasn't able to go into great detail on each topic today, because there was so much to cover. But again, if you're interested in going more in depth and really pursuing wealth, leave a comment or send me a message on any questions you may still have.

Until then, I'm cheering for you!

Want lifetime access to the Goal Planner I designed to help myself set and achieve goals such as paying off debt, buying a house, and starting a business? Grab yours here!

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