Looking for ways to build wealth from scratch? In this article, you will learn strategies used by the 1% of the Kenyan population to enrich themselves with more wealth.
These are the same strategies that the upper class of other countries swear by and endorse at all times.
Ideally, creating wealth sounds like something hard and out of reach.
It even feels like it is only reserved for some special few. But the truth is, all of us have a shot at creating unlimited wealth whenever we want to.
Well, maybe you weren’t lucky to be born with a golden spoon in your mouth, which means that if you do not work, you won’t have anything under your name.
Truth is, the situation will always be like that unless you do something. As such, I must first applaud your zeal and willingness to learn more about wealth creation.
I can’t tell you how many people have given up and are languishing in self-pity asking ‘why me.’
But here you are, learning everything you can to change your situation.
Bill Gates once said that if you were born poor, it wasn’t your fault. But if you die poor, that will be your fault.
One more thing; is it possible to be rich and not wealthy? Is there a difference between being wealthy and being rich? Continue reading to find out.
6 ways to build wealth from scratch
You understand what saving means; the act of putting aside a percentage of your income for later use.
If you are earning at least 100K per month, you can decide to set aside 30% of that income every month. This means that you will be saving 30K per month.
And use the remaining 70K to cover your expenses.
Ideally, the wealth formula is simple.
Wealth = Income – Expenses.
This means that whatever remains after paying all the bills, is your wealth.
As much as I want you to believe it’s simple, it isn’t. And here’s why…
See, not all saved amount translates to ‘wealth’. When you save, try to ensure that the saved money works for you.
There are two kinds of people; type A are those who save and turn the money into wealth, and type B comprises those who just save for the sake of. The money just sits there in the bank.
Here is the thing:
The goal of saving is to turn that money into wealth.
Otherwise, you will be wasting the value, thanks to inflation.
What should you do instead? This brings us to our next way of creating wealth from scratch.
Investing is the process of trying to multiply your money. This is the #1 way of creating wealth from scratch. Why?
Because you are turning the 30K you have into 35K, into 50K, and hopefully into 1M.
There is something you need to know about investing; you must have the capital. This is the seed fund or money you will put into an opportunity with the expectation of receiving more.
This is where your saved money comes into play.
See, if you hadn’t saved, opportunities would be passing by your nose, and not be able to do anything. Why? Because you cannot invest without capital.
So, what should you invest in?
There are two types of investment opportunities:
- Risky investments – these are opportunities with a higher risk of losing invested capital. But, the possible returns are higher too, I am talking 3X your capital and above. For example, high-yield bonds. They can offer extremely high returns, but the risk of losing the principal is also high. Another example is forex trading. As much as it promises high returns, the risks involved are huge, and thus not for beginners.
- Low-risk investments – comprised of opportunities that are almost guaranteed to return your money. In most cases, such opportunities promise minimal returns. For example, dividend-paying stocks. Here, you buy shares of a company, and they will be sharing their profits with you. If you do your homework well, you should be able to only pick the best-performing stock in the market.
Therefore, you should assess your risk tolerance.
Do you feel like you can go after risky ventures with a promise of huge returns, or you would rather sleep peacefully and get a handful of ROI?
If you are in your 20s and early 30s, you can consider risky investments. The reason is you don’t have much to lose. And if you lose, you have enough time to recover.
At this age, you can put your money in the Forex market, fail your way through the first 2 years, and strike a jackpot in your 3rd, or 4th year. How? Because you have enough time to learn from your mistakes, you can quickly turn things around.
Someone beyond the 50s cannot say the same. At this age, you should be focusing on less risky opportunities.
As such, you cannot advise someone in their 60s to try the forex market. Well, unless they have been in the industry for long, they have gained enough experience.
Here are some other worthy investment opportunities to consider
- Real estate – consider putting your savings to work through a rental property. All you have to do is buy a property, and rent it out to earn your income as you wait to sell it when the market goes up.
- Crypto assets – digital coins have the potential to double your money. And as you can guess, you can easily lose the capital. You should therefore only indulge in crypto trading if you understand what you are doing. For example: in 2009, Kristoffer bought $26 worth of Bitcoin, which was around 5,000 bitcoin (yes, that’s right). Can you guess what that is worth now?
- Put the savings in safe investment options like bonds, bank deposits, and securities. Again, the interest rates are lower as compared to the stock market and crypto, but your capital is safe.
I’d recommend you diversify your investments. Let me explain:
Instead of choosing one side, you can be on both sides, risky and safe.
Invest in yourself
How is this different from point #2 above?
Well, investing in yourself means developing yourself in terms of education. This could mean getting a degree, going for an MBA, or earning that certification.
Why is this important?
When it comes to creating wealth, you need to be earning more considering that you will probably be saving a lot. To command more in your career, you need to bring more to the table.
As such the only way to earn more is by being more valuable, that is where education comes into play.
If you are a financial consultant, you can go for a Certified Financial Planner certification.
Having it sets you apart from the competition, and empowers you to command higher rates.
Get out of debt
The huge obstacle to building wealth from scratch is having high-interest debts. It is a stumbling block that unless checked, you will not achieve your wealth goals.
Some car loans, student loans, and credit cards fall into high-interest debts. With such debts, you are simply handing over your income with nothing tangible in return, except the ‘benefit’ of having something sooner than you can afford.
What should you do?
Make the minimum payments on all of your debts. And then throw the biggest remaining amount on the debts with higher interest.
Soon, you will be free of such debts and all of a sudden you have extra income in your hands, what do you do with it?
Well, instead of upgrading your lifestyle, buying more cars, a new TV, or upgrading your phone, consider investing the extra cash.
Getting out of debt releases extra income, which you can find suitable investment opportunities for.
Also Read: – 15 EASY WAYS TO EARN MONEY ONLINE IN KENYA IN 2024
At first, we mentioned that income – expenses = wealth. Well, if you want to increase wealth, you reduce expenses or increase income.
For now, let’s see how to reduce expenses.
Ask yourself this question; are you living a hand-to-mouth lifestyle? Are you living paycheck to paycheck? If yes, I have bad news and some good news
The bad news, you cannot build wealth with such a lifestyle.
The good news, it is not too late to change.
I mean, do you need a car? Do you need a 55-inch TV screen? No, you don’t.
If you are interested in building wealth from scratch, you need to spend less than what you earn. Doing that sets you in the right direction, as far as financial freedom is concerned.
Audit your lifestyle, what are the things you can live comfortably without? Eliminate them to free extra income, then put them into investments or servicing your debts.
On the same note, in case your income increases, keep your expenses even. There is this behavior, known as lifestyle inflation, which keeps creeping at the moment you have extra income in your hands.
Here, you are allowing your spending to rise with your income. It is dangerous and works against building wealth.
- Move into a smaller house to save on rental expenses.
- You don’t need branded clothes.
- Instead of a brand-new car, you can get a used one for cheap.
- Take advantage of shopping discounts, you know things like coupons, discount deals, black Fridays, etc.
If you cannot trim the expenses, you can increase your income. How? See the next way to build wealth from scratch.
More income streams
If there is something that the wealthy share and agree on, is having more than one source of income.
The idea is having so much money flowing in than going out.
This is where your income comes on top of the expenses, and only then you can start building and accumulating real wealth.
Think for a second, if you are relying on one source of income to sustain yourself, what happens when it suddenly dries up?
Do not wait until you are faced with a rock and a hard place to start looking for additional streams of income.
You should start now. Here are some ideas to get you off the ground:
- Blogging – you can start blogging and earn money on the side through ads, sponsorships, and affiliate marketing. If you don’t want to start a website from scratch, you are in luck because there several people out there selling fully functional online businesses.
- Start a second business – if you are currently running a business, consider starting a second one. Given that the businesses can run without your involvement, you should be okay.
- Take on freelance gigs – if you have a full-time job, it means you have valuable skills that someone is willing to pay for. As such, you can take on side projects to earn extra income (as long as they do not conflict with your job, or you risk getting fired).
- Online store – you can open an online shop and sell fast-moving products like shoes, ladies’ bags, etc. Such businesses do not require a physical office and next to zero expenses.
Again, once you have extra income flowing in, resist lifestyle inflation, and instead save the money to invest.
Work hard now
With whatever you are doing now, give it all.
Are you an intern?
Good, give it all you’ve got. I know sometimes the work just seems meaningless, maybe serving coffee, shredding papers, and running errands around the office.
I know of a friend who started that way and he didn’t give up or despise his job. Guess what happened in the end?
After his internship, he was offered a full-time job with the company. Why? Because his work ethic was unquestionable.
The same goes for those with a job. Act as if you own the business or you are the CEO.
Truth is, it is a lot difficult to get good opportunities nowadays, but it is not impossible.
As such, start working hard and people around you will notice. It opens opportunity doors.