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You don’t have to earn over six-figures a year before you start learning how to build wealth.
Creating wealth isn’t easy but at the same time, it’s not mission impossible for most average Joes as long as you learn how to form healthy habits with your money and stick to a long-term savings and investing plan.
I am an example of a person who grew up in a low-income family and had no clue about personal finance or how building wealth works.
Just being able to pay the bills on time, including those minimum payments on the credit card bills, with no savings left was the best we could do.
But by the time I was in my early 20s, I educated myself with all the ways to acquire wealth when I realized my parents were always fighting about money at home.
One of my favorite ways to build wealth includes making extra money so I could increase my savings rate without significantly cutting back on my spending.
From knowing absolutely nothing about money to saving over six-figures in my 20s, I’m going to talk about everything you need to know about building wealth from nothing.
Wealth building definition
What does “building wealth” mean?
Let’s start off with a simple wealth building definition.
“Creating wealth is a long-term journey of earning, saving and investing money.”
Many people want to learn how to grow and accumulate wealth simply because they have the goal of achieving financial independence.
This may not be everyone’s goal because there many who are passionate about growing wealth to become rich like a multi-millionaire or even billionaire.
But for the purposes of this post, we are going to assume that the purpose of growing wealth is so that you can live a very comfortable lifestyle without having to become extremely rich.
Now, let’s look at the best ways to build wealth so you can reduce financial stress and live the life you want.
How to build wealth from nothing
Here is a list of wealth building strategies and ideas that will help you learn how to build wealth from nothing. If you start now, you’ll see that in 10 years of time, you’ll become richer than you think!
Seriously, saving early and reaping the compounding interest effects from investing could potentially make you $1,000,000 richer down the road!
Whether you’re in your 20s, 30s, or 40s, you can use these wealth building tips to help you build a healthy relationship with your money.
1. Create a budget
Learning how to create a budget is so important especially for beginners who are looking to build wealth.
Find the perfect budgeting method that best fits your personality. It doesn’t need to be a strict budget, but by following a budget, you will know your cash inflows (i.e. income) vs. cash outflows (expenses).
If you’re looking for ways to build wealth, then understanding where your money goes and how it gets spent matters.
Inspired by Gail Vaz-Oxlade’s savings and budgeting strategies, I initially created a free budget template printable for myself. After having major success with it, I would love to share this free resource with you.
Sign up here to get your copy so you can start creating wealth with good budgeting plan.
2. Live below your means
It doesn’t matter if you earn over $100,000 per year when you’re spending all or most of it. Just because you have a high income it doesn’t make you rich if you’re not making your money work for you.
You hear of stories like lower-wage earners who were able to consistently save and build wealth over the long term by living below their means.
It’s not to say to cut back on your guilty pleasures, but it all goes back to creating a budget, understanding your spending behavior, and prioritizing your needs plus wants.
If you find that you’re stretching it too far, then it helps when you look for creative ways to make extra money which I talk more about in a bit.
3. Have a passion for savings
People who are serious about building wealth have a passion for savings.
Saving money isn’t about looking for the cheapest price or alternative that lacks quality. It’s about finding better deals or buying things that give you more value for the same price.
For example, I love Starbucks and I’m not willing to cut back on their drinks just to save money. Instead, I keep an eye out for specials so I could get free Starbucks drinks more frequently.
Overall, it helps when you have an interest in spending some time to find ways to save money on the products you love.
If you not, then you’ll find yourself paying regular prices a lot of the time.
4. Look for free money resources
Speaking of saving money, did you know that you can get free money today when you take advantage of the best money resources and tools out there?
You could even find ways to score free gift cards when you do simple tasks online such as taking paid surveys, watching videos, surfing the web, and more.
These are all the free money resources I use to earn extra cash for my spending fund. They won’t make you rich but they are fun ways to get free money or gift cards to your favorite shops.
5. Get out of debt
Okay, we’re not going to go into technical details.
We hear about good debt vs. bad debt. We hear about how borrowing money at low rates to invest is a good way to build wealth.
We’re not going to be talking about that sort of debt here.
When we say get out of debt, we mean to get out of consumer debt or any debt that causes you to not sleep at night!
Let’s assume you’ve racked up a ton of credit card debt or that you owe your friends a lot of money! Any interest payments that go towards loans is making you poorer each day, so it’s important to pay off your debt as soon as possible before you think about building wealth!
If you can’t get through the first step of reducing your debts, then it will be hard to save, invest and build wealth for your future.
Related post on how to build wealth: Should I Save or Pay off Debt?
6. Make extra money
Living below your means and saving money is so important.
However, there is only so much you could save before you start feeling deprived of the things you enjoy in life.
Finding ways to increase your income or making extra money can help you build wealth especially in your 20s, 30s, and 40s.
Saving money can help reduce your expenses. But earning more money can help you in many ways such as saving more money, investing more for retirement, and allowing for more room to spend on the things you love.
As you can see, making extra money on the side can help you create a more flexible financial plan in your wealth building journey.
A couple of ways you could start earning extra money so you can create wealth include starting a blog or flipping furniture. These are gigs I do to give my income a nice boost by several thousand dollars per month.
You can also discover many different creative ways to make $100 a day if you are serious about looking into earning extra money from home.
7. Change your mindset and focus on earning more
Earning extra money is one way to earn more.
But what about finding ways to increase your salary or even starting your own business to help people solve a problem?
The people with a rich mindset focus on earning more through serving others.
According to self-made millionaire, Steve Siebold, he wrote:
“While world-class thinkers understand the importance of saving and investing, they direct their mental energy toward accumulating wealth through serving people and solving problems,”
You can learn more about how rich people think by reading Siebold’s best-selling book here.
8. Invest your money
Have you gotten out of consumer debt?
Have you started with your savings plan plus have some money saved up for emergencies?
Great! You have a good foundation and can start thinking about how to invest with exchange-traded funds (ETFs).
According to the National Study of Millionaires by Ramsey Solutions, three out of four millionaires (75%) said consistent investing over a long period of time is the reason for their success.
9. Improve your credit score
Did you know that you can save several thousands of dollars just by having an excellent credit score?
The higher your score, the less interest you pay.
To build up our credit score, make sure you pay back all of your credit card balances IN FULL each month.
Also make sure you pay all of your bills on time such as the Internet, cell phone, insurance, student loans, etc.
It’s important to get a good understanding of how important your credit score is when it comes to building wealth.
As a start, you can check your credit score for FREE at Credit Sesame (for the U.S.). You don’t have to worry because it won’t impact your credit score at all!
It’s crucial to know where you stand so that you can improve your score and save more money and build wealth.
10. Read personal finance books
Educating yourself about personal finance by reading the best-selling books can help you with building wealth over a long period of time.
The Millionaire Next Door is a very popular and inspiring book that teaches you about millionaires and their wealth building habits.
I read a ton of personal finance books when I looking for an answer to how to become a millionaire. But this one book opened up my eyes and made me realize that there are a lot of wealthy people with low to average incomes who spend less than they earn.
Overall, this book presents interesting facts about the low vs. high-income earners, and it really inspired me to live below my means.
If you haven’t read it, I strongly encourage you to pick up your copy because a lot of the facts in this book may shock you.
Another personal finance book I highly recommend picking up if you are looking for tips to build wealth and get rich is Rich Dad Poor Dad by Robert T. Kiyosaki.
You can also read my book review on Rich Dad Poor Dad for more details.
How to build wealth at any age
When is the best time to start building wealth?
If you’re a young and ambitious 20-year-old, you’re probably trying to look for the fastest way to build wealth because you want to be rich in your 20s.
If you’re in your 30s today, you may be wondering how to create wealth in 10 years so that you can live a better life in your 40s.
And if you’re in your 40s, you may be a bit worried because you’re halfway into your career earning your highest income without a retirement plan.
The answer is there’s no best or right time to start creating wealth, but it certainly helps a lot when you start earlier.
One thing’s for sure is you can learn how to build wealth at any age.
With that said, it’s never too early or too late to get started. In fact, the best time to start is right now since you are on this page reading about the ways to create wealth.
How to build wealth in your 20s
One of the best times to start saving money and building wealth is in your 20s.
It’s not to say you should spend all your time hustling for money and living under a rock just so you could sock away all of your savings.
After all, your 20s is the time you should be partying and having fun but it’s also important to acknowledge what wealth building is and starting a savings plan as early as possible so you won’t regret down the road.
Trust me, when you learn how to build wealth in your 20s and save your first million dollars, you’ll reduce financial stress and live a much more comfortable lifestyle 10+ years down the road.
If you’re still living with your parents or flying solo with no family responsibilities, you have it much easier now, so take advantage of the fact that time is on your side!
How to build wealth in your 30s
If you haven’t gotten started yet with creating wealth or saving for retirement, then it’s time to start now!
You’re now officially a “responsible adult” and your living expenses aren’t going to get any cheaper from here on. With 78% of workers living paycheck to paycheck, it may be tough to save and invest while covering for your daily expenses.
But with the right budgeting and savings plan, you can still achieve your dreams of financial independence.
Be sure that you continue to live below your means and set aside at least $1,000 in an emergency fund. Aim to have all your debts paid off before you start investing.
Also, don’t forget to max out your retirement savings fund by taking advantage of your employer’s contribution match.
According to Fidelity, you should set aside at least 15% of your pre-tax income each year for retirement. When you get contribution matches from your employer, it makes saving money easier for you. It’s like getting free money, so you don’t want to miss out on benefits like these.
Summary of how to create wealth
Whether you’re in your 20s, 30s, 40s, or 50s, it’s never too late to start creating wealth so you can reach financial independence sooner.
Learning how to build wealth involves three components which are earning, saving, and investing money.
But before you get started with growing your wealth, be sure to pay off all your consumer debts first. Only then can you really be in the position to start saving money for your retirement.
Here is a quick summary of how you can start your wealth building journey:
1. Follow and create a budgeting plan that best fits your personality.
2. Live below your means by spending less than you earn.
3. Learn to have a passion for savings by looking for coupons, free money, and the best deals on products you love.
4. Look for free money resources so you can save money or earn extra money for free.
5. Set a plan that will allow you to pay off all your debts before you get started with investing and building wealth.
6. Find creative ways to make extra money on the side for additional income.
7. Change your money mindset by focusing on increasing your earnings that are beyond making extra money.
8. Whatever additional earnings and savings you have left, be sure to park them into investments that align with your risk tolerance profile.
9. Don’t forget that building up your credit score during your wealth building journey can help you save thousands of dollars over a long period of time.
10. If you’re excited to learn more about saving money and wealth building strategies, pick up a few personal finance books written by personal finance experts who can help you with wealth creation.